Episode summary
3 Hidden AI Revolution Stocks to Buy Now
Zacks Market Edge
· · Hosts: Tracey Ryniec, Mark Zinski, Neena Mishra, Ethan Feller
Summary
The host argues that the AI trade is broader than Nvidia, Micron, or software names and is now reaching old-economy companies that help build the data-center and industrial backbone of the AI boom. She says the real story is money flowing down from hyperscaler spending into turbines, equipment, rentals, and infrastructure, with some of these names already showing strong earnings and revenue acceleration.
She highlights BorgWarner, Caterpillar, United Rentals, and Hewlett Packard Enterprise as hidden or overlooked AI beneficiaries. BorgWarner is developing turbines for data centers, Caterpillar and United Rentals are tied to data-center construction and equipment demand, and HPE is benefiting from enterprise data-center buildout. The host says these stocks are breaking out to new highs or near highs because the market is starting to price in AI-related demand that was not obvious before.
Valuation matters in her argument: BorgWarner and HPE still screen as cheap on forward P/E, price-to-sales, and price-to-book, while Caterpillar and United Rentals are pricier but supported by strong earnings growth and momentum. She concludes that investors should watch for pullbacks, but says the earnings trend and stock momentum suggest the AI opportunity is still expanding beyond the most obvious names.
Key takeaways
- The host says the AI spend is creating winners beyond tech, especially in industrials and infrastructure tied to data-center buildout.
- BorgWarner is a hidden AI play because it has an order for data-center turbines, with revenue benefit expected to show up in 2027.
- Caterpillar and United Rentals are benefiting from equipment demand as data centers and electrical infrastructure are built out.
- Hewlett Packard Enterprise is seeing a sharp earnings re-acceleration, which the host says signals enterprise AI demand into 2027.
- The host favors stocks that combine momentum with reasonable valuations, especially BorgWarner and HPE.
- She warns that even these breakout AI names could pull back if the broader market cools off.
Notable quotes
“the universe of quote-unquote AI stocks is actually quite large”
“this year, we're expecting to see over $700 spent on AI”
“I would put them on a list as an AI stock now”
“momentum begets momentum, according to my colleague here at Zacks, Dave Bartosiak”
How the episode opens
Stocks, bonds, ETFs. Straight out of downtown Chicago. This is Zacks Market Edge.
Welcome to Zacks Market Edge, the podcast about investing in your life. I'm your host, Tracy Ryniec. And this week, I'm going solo to talk about hidden AI stocks.
And what do I mean by hidden? Well, I was having a discussion with someone on X the other day about the AI stocks. And um she said, you know, they're overvalued, you shouldn't be buying them.
And I just asked which AI stocks are you talking about Nvidia? Are you talking about the memory side, like Micron and SanDisk? Are you talking about companies that are using AI in their business, um you know, incorporating into their software, like ServiceNow?
Are you talking about the data centers? Who's building those? Are we talking about who's cooling the data centers?
Who's installing the racks and other equipment inside the data centers? And as you go through this list, you start to see that the universe of quote-unquote AI stocks is actually quite large. And there might be some companies that are seeing the benefits now from all of this AI spending.
Remember that this year, we're expecting to see over $700 spent on AI. Whether or not we actually get that isn't really the important point. Let's say we only see 300 billion spent on AI this year.
That 300 billion is going back into the economy and to these companies, the companies in the AI uh revolution, so to speak, and you know, participating in the buildout of the AI system or infrastructure. So, what are the companies that might be hidden AI stocks that you don't even know about that are out there? We're starting to see it now in a lot of the earnings reports and we're seeing that actual money trickle down to these other companies.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- hidden ai stocks
- ai revolution
- stock picks
- semiconductors
- equities
Companies and tickers mentioned
- NVDA
- Nvidia
Watch the episode
Watch “3 Hidden AI Revolution Stocks to Buy Now” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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