Episode summary
The AI Infrastructure Stocks are on Sale: Buy Now
Zacks Market Edge
· · 40 min
Summary
The host argues that three AI infrastructure stocks have pulled back enough to offer fresh buying opportunities before earnings: Sterling Infrastructure (STRL), Comfort Systems USA (FIX), and Everest (ECG). The emphasis is not on chips or memory, but on the companies building data centers, providing specialized cooling, and handling electrical and mechanical infrastructure around the AI buildout. The host’s core view is that the hyperscalers’ spending cycle is still intact, so investors should follow where the money is going rather than into the chipmakers themselves.
Sterling Infrastructure is presented as the strongest of the group, with demand still red-hot, a Zacks #1 rank, and estimates still rising after a big beat-and-raise quarter. Comfort Systems is also seen as attractive after an 11% recent pullback, with the host highlighting its cooling exposure and a strong earnings surprise record ahead of a July 23 report. Everest is the least known and more modestly valued, with a later earnings date and slower projected growth, but the host still likes its exposure to electrical, mechanical, and utility-related construction. Across all three, the argument is that the AI infrastructure trade is not over yet.
Key takeaways
- The host says AI infrastructure stocks are on sale now, with some names down more than 20% from recent highs ahead of earnings.
- Sterling Infrastructure (STRL) is the host’s favorite, with demand still strong, a Zacks #1 rank, and earnings estimates rising after a big beat-and-raise quarter.
- Comfort Systems USA (FIX) is highlighted for cooling data centers, and the host says its recent pullback makes it more attractive despite rich valuation multiples.
- Everest (ECG) is the least followed of the three, but the host likes its electrical, mechanical, and utility exposure and notes its smaller size could make it a hidden gem.
- The host expects the hyperscaler spending cycle to continue supporting these businesses rather than peaking immediately.
Notable quotes
“the first one is one I've covered many times over the past three years. Sterling Infrastructure, ticker S as in Sam, T as in Tom, R as in Robert, L as in Larry”
“They may be involved in cooling the data centers. They could be involved in uh powering the data centers. All of this, yes, revolves around the data centers, but that is what is driving the AI revolution”
“I do consider this to be a buying opportunity in nearly all of these stocks”
How the episode opens
Stocks, bonds, ETFs, straight out of downtown Chicago. This is Zach's Market Edge. Welcome to Zach's Market Edge, the podcast about investing in your life.
I'm your host, Tracy Reinick, and this week we're going to talk about some AI infrastructure stocks, which we've talked about many times over the past three years, but they're on sale. That's why I want to cover them right now. Are you buying?
Are you buying this dip? And it's not just a 5% or even a 10% pullback in the case of some of these stocks. Some are down over 20% off of their recent highs in just the last month.
And so this is a big buying opportunity before they report earnings. So what do I mean by AI infrastructure? I'm not talking about the chips.
So, we're not going to talk about Nvidia, Taiwan, Semi, uh, Broadcom, any of those today. And I'm not talking about memory and storage either, Micron and SanDisk, although they have gone on sale as well. Uh, maybe that's another episode.
But today, I'm talking about the other companies that are involved in AI but are on the infrastructure side. So they may be construction companies and they're building the data centers. They may be involved in the engineering of the data centers.
They may be involved in the racks that go into the data centers and the structure of where you put the chips in the data centers. They may be involved in cooling the data centers. They could be involved in uh powering the data centers.
All of this, yes, revolves around the data centers, but that is what is driving the AI revolution. Without data centers, you don't have AI. So, this is the vital component of the AI revolution.
These stocks have really taken off the last couple of years.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- ai infrastructure stocks
- stock pullback
- buy opportunities
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Watch “The AI Infrastructure Stocks are on Sale: Buy Now” on YouTube
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