“This is a real market, with a real opportunity. Best-in-class technology companies take advantage of these opportunities.”

We are now in the third month of a calendar quarter, past the rush of corporate earnings season, which is a relatively quiet time that companies often use to hold an “analyst day” event, when they make various promises to the brokerages that cover them.

Last week saw two rather successful such days, from Nvidia, on Tuesday, and Corning, on Monday.

This week, not as interesting.

Tuesday at the Nasdaq in New York, IT services giant Cognizant Technology Solutions was holding its gathering. The gathering comes as activist fund Mantle Ridge has taken a billion-dollar stake in the firm, arguing the stock is undervalued, according to The Wall Street Journal’s Lauren Thomas and Ben Glickman. 

Talk of an artificial intelligence bubble is back in the news this morning, with a report by Reuters’s Kane Wu from the HSBC Global Investment Summit in Hong Kong this week regarding remarks by Alibaba’s chairman, Joe Tsai. 

Wu quotes Tsai as alluding to the five hundred billion dollars that SoftBank chairman Masayoshi Son pledged in January for the “Stargate” project he is engineering with OpenAI and Oracle. 

“He said he thought it was worrying when people began to talk about building data centers on spec, adding that he was seeing ‘the beginning of some kind of bubble’,” writes Wu.  

Bloomberg’s Luz Ding has the other key part of Tsai’s remarks, quoting him as saying, “I start to get worried when people are building data centers on spec. There are a number of people coming up, funds coming out, to raise billions or millions of capital.”

It should be clear that Microsoft is in what technologists call the “trough of disillusionment.” That’s what you call it when much-hyped tech fails to deliver in a timely fashion. 

Following prognostications in 2023 that Microsoft would swiftly earn tens of billions in new revenue from artificial intelligence programs of the “Copilot” variety, nothing of the kind has materialized.

The stock has suffered mightily as a result of such disappointment, declining eight percent in the last twelve months, versus double-digits gains for its Mega Cap peers. 

Brent Thill of Jefferies & Co. on Monday, without using the phrase trough of disillusionment, acknowledges investors’ disappointment. But he also makes the case that the stock is one of the best Mega Cap picks going forward. 

Update:

The stock is lower this morning by three points, which I would ascribe to some dissatisfaction that gross profit margin is going to dip in the near term for Micron because of HBM costs. Nevertheless, price targets are going higher.

Previously:

Shares of DRAM and NAND flash memory chip maker Micron Technology were up by a point in late trading Thursday evening as the company’s revenue topped consensus by two percent, the best upside since June, and a big relief after missing expectations back in December.

The revenue outlook for this quarter was three percent higher than expected, also a welcome surprise.

As in prior quarters, the star of the show was demand for artificial intelligence applications. More important, the company offered a sliver of hope that thepersonal computer and smartphone markets are starting to move past the worst of the build-up of chip inventories that caused Micron to cut its forecast in December.

As a result, the company raised its outlook for 2025’s DRAM chip demand.

Following Nvidia CEO Jensen Huang’s keynote at his company’s annual developer conference Tuesday, “GTC,” the Street spent another day talking privately with Huang and his deputies.

Their aim was to gain greater confidence that DeepSeek AI and similar open-source software are not going to destroy demand for Nvidia GPUs.

It seems Huang settled many analysts’ concerns about chip demand.

Matt Bryson of Wedbush Securities relates that his main takeaway was, “Our conversations suggested extremely strong demand for Blackwell,” and that, “we encountered no reasons to anticipate near term risks, and rather just signs of continued growth in supply chain requirements.”

As depressed as stocks have been of late, let’s remember that stocks have been fairly expensive as well, having seen huge gains in the past couple of years. You need look no further than overpriced artificial intelligence names such as Palantir, trading at over fifty times projected revenue.

Or Wiz, the thirteen-year-old, privately held cyber-security firm that Tuesday agreed to be bought by Alphabet for thirty-two billion dollars in cash, Google’s biggest acquisition ever.

Speculation is Wiz has about three quarters of a billion dollars in “run-rate” revenue, annualized, which puts the price at forty-nine times forward revenue, which is Palantir-level pricey.

Alphabet, in other words, is paying a price that’s reflective of a near-term market top, which is why investors were not thrilled with the deal, and Google stock sold off by three points on Tuesday. Remember, Google had tried to buy Wiz eight months ago, reportedly for only twenty-three billion, and that deal fell through. The subsequent rise in price is all upside for Wiz’s founders.

Nvidia’s CEO, Jensen Huang, delivered pretty much everything expected on Tuesday with his keynote in San Jose at the company’s annual GTC conference, though it didn’t make a difference for the stock, which traded down over three points to close at $115.43.

A lot of partners were hyped at the show, including Lumentum, Coherent, Pure Storage, Micron Technology, and Dell, but the news didn’t help their shares, either, all of which traded down in similar fashion with Nvidia’s.

“investors’ attitude toward the speech appeared to be somewhat lethargic,” observes Cody Acree of the Benchmark Company, who rates the stock a Buy, with a $190 price target.

“Although Jensen’s Keynote may not have been the savior of the company’s declining stock price that many had hoped, we question what more the company could have said,” he writes.

We’ve come to the end of another earnings season, which began December 9th with Oracle, always the first to report. This earnings season has played out amidst substantial volatility in the market, with the uncertainty over tariffs and trade and geopolitics causing substantial swings in the first part of the year.

On Monday, I looked back over how stocks have fared during this earnings season, and I made a list of best and worst performers.

Out of 241 companies, measured from the closing price before the earnings report through close of trading on March 14th, top performers included cyber-security vendor Okta, with a 29% gain, and Intel, with a 20% gain. 

Worst-performing names included The Trade Desk, which missed revenue expectations for the first time since its IPO back in 2016 — a sign of the growing uncertainty in the advertising market. 

The earnings season is now winding to a close as most tech names have reported. Oracle kicked things off back in December, always the first to report as the company claims its “Fusion” software allows it to close the books within a week of the quarter’s end.

So, what has risen and what has fallen since December? Not Oracle, its shares trading down fifteen percent from the day of earnings, December 9th, through last Friday’s close. That’s worse than the market decline of ten percent as measured by the Nasdaq. (Oracle kicked off the new earnings season last Monday, and that report was also something of a dud.)

I’ve reviewed a representative two hundred and forty-one names from the universe of U.S.-listed techs. Of those, I’ve placed in the table below the names with the biggest gains since their report and the names with the biggest losses, all based on the close on Friday.

This week brings Nvidia’s annual week-long conference in San Jose, California, the GTC show, at the SAP Center, where CEO Jensen Huang will give a keynote Tuesday afternoon.

Twenty-five thousand attendees are expected in person and three hundred thousand online. 

The event “could recalibrate investor thinking on long-term opportunity,” writes Stifel’s Adam Borg, alluding to the DeepSeek AI implosion of the market in January that caused lots of panic about whether demand will hold up for Nvidia chips.

Even though Nvidia’s earnings call last month showed no slack in demand for its chips, and even though the DeepSeek economics seem at times rather stretched/hyped, the worries are still out there.

Shares of Intel are up almost fifteen percent today at $23.77 after the company late Wednesday announced its new CEO, Lip-Bu Tan, former CEO of chip software maker Cadence Design Systems, and noted venture investor.

The overall response is very positive, but cautious, among longtime Intel observers.

Tan comes with enormous industry credentials. He had been appointed to Intel’s board in 2022, and in 2023, former CEO Pat Gelsinger, who was ousted by the board in December, spoke glowingly of Tan at an investor conference, remarking, “He's the most networked individual in semiconductor […] those people called connectors have 7x the network of the rest of us mortals, well, Lip-Bu is like a 70x, right. He's just so connected.”

Ironic, given that Tan left the board of Intel in August, apparently because of differences of opinion with Gelsinger.

You’re certainly aware that the flow of news around Tesla has not been good of late, pushing its shares down almost forty percent since the start of the year.

Analysts are searching for the bottom in the business as the company’s deliveries face downward revisions. The average estimate on the Street is still for deliveries to rise this quarter, by perhaps eleven percent, from 387,000 a year ago to 430,000 units. But some are expecting a decline.

Guggenheim’s Ron Jewsikow, who rates the stock a Sell, cut his estimate for this quarter to 358,000 deliveries from 405,000, below last year’s number. JP Morgan’s Ryan Brinkman, who has an Underweight rating, sees the situation even worse, cutting his number to 355,000.

Both Jewsikow and Brinkman are citing recently acquired data from undisclosed checks to revise their numbers.

Oracle’s earnings report Monday evening was the second disappointing quarter in a row, and once again, investors are asking themselves if they believe in the future rates of revenue growth that CFO Safra Catz has promised. 

Price targets that rose following the December report are now going back down, and the shares are down over four percent Tuesday, bringing the stock’s loss this year to twenty-five percent. 

But that’s old news. Suddenly, there is a new worry: Profit, and whether Oracle can get enough of the artificial intelligence “inference” market to sustain profit margins.

What does that mean? Bear with me on this. 

“A period of transition” is what the stock market is going through, according to U.S President Donald Trump — that’s the phrase he used on Fox News over the weekend. That neutral-sounding language has not helped to calm markets. As I record this on Monday, the Nasdaq Composite Index is down 4%.

Following a decline of 3% in the Nasdaq Composite Index in the week ending March 7th, on Monday, the index closed down another four percent. Many techs were hit hard, including Apple, down 5%, Tesla, over 15%, Palantir, 10%, Arm Holdings, over 7%, Alibaba down almost 6%, and Nvidia down 5%.

Large declines for the year now: Tesla now down 45% for the year, Palantir about flat for the year, ARM down 6%, Nvidia off 20%, Apple down 9%, and Google down 12%.

In a rather depressed market, some stock analysts are prospecting fallen angels.

One is Samsara, the maker of software and sensors for the Internet of Things, which had done very well in 2024, but is down twenty-three percent since the start of this year. Samsara is one of the TL20 groups of stocks worth considering.

The stock gets two upgrades on Monday, from James Fish of Piper Sandler and from Daniel Jester of BMO Capital, both of whom raise the stock to the equivalent of a Buy rating.

Fish has a $50 target on the stock, versus a recent $34.51. He writes that his view on Samsara is the same as it had been before, with lots of positives including sales growth. What has changed are expectations and valuation, both reset lower. “Investors are realizing +30% [revenue growth] is not likely to be sustained. However, we think +20% is easily obtainable over the next few years,” writes Fish.

The Nasdaq Composite, already down six percent this year amidst contemplation of a global recession, reflects even deeper declines in some of the best tech names, such as Nvidia, down sixteen percent since the start of the year.

What the depths of the eventual correction will look like for techs, I cannot say with any great precision. What I can tell you is that holding stocks of great companies such as Nvidia has paid off very handsomely in good times and bad.

“There hasn't been an investment like this since copper was deployed in the network … There is a lot of capital chasing that.”

Thursday evening’s report from Broadcom, which has driven the stock up over ten percent in pre-market trading, showed what an enviable position the company is in vis a vis Nvidia.

Both are highly successful in the artificial intelligence market, but where Nvidia has a seemingly impossible task of constantly replicating its success every quarter, expectations are somewhat lower for Broadcom, allowing the company to steadily turn up the dials and surprise the Street with what it can achieve each quarter.

Both the reported results and the forecast beat expectations comfortably, but the star of Broadcom’s report was the surprising growth in the portion of its revenue specifically from AI, which was up seventy-seven percent at $4.1 billion. For this quarter, the company sees that rising another forty-four percent, to $4.4 billion.

Highly priced equities in artificial intelligence such as Palantir, ARM Holdings, and Astera Labs are about to get more competition for investment dollars as the initial public offering window eases open a touch in 2025.

The first shot over the bow is the filing Monday by CoreWeave of Livingston, New Jersey, the eight-year-old provider of AI hosting services for those who don’t own GPU chips from Nvidia and want someplace to rent them.

The IPO, lead by Morgan Stanley, JP Morgan, and Goldman Sachs, would trade under the ticker CRWV, and has yet to be priced. 

Monday night brought some bright news for two beaten-down software names, Okta, makers of tools for cyber-security authentication tasks, and GitLab, which competes with Microsoft’s GitHub platform for software programming.

Both had been real dogs in 2024, with Okta declining ten percent last year and GitLab down eight percent.

Both of them had been hit with the same things that have bedeviled much of the software group for a while now: slowing sales, lengthening contract negotiations that delayed the signing new business.

Tuesday, shares of Okta are soaring by twenty-four percent and GitLab is up twelve percent.

Quick: If you buy an apple for $0.87, and sell it for $5.62, how much profit do you have? Eighty-five percent, right?

Not so fast. DeepSeek AI, the artificial intelligence startup run by a team formed by a Chinese hedge fund, which torpedoed the Nasdaq on January 27th, has been a sensation for eye-opening economics it has professed for its AI software. It claims it was able to achieve top-tier results, comparable to OpenAI, for a fraction of the cost.

Friday, the company caused a new sensation that is reverberating on the Street Monday, the revelation of what appeared to be a five hundred and forty-five percent profit “margin.” 

On the software developer site GitHub, owned by Microsoft, the company’s developers posted that they demonstrated a “peak” computing cycle to run their software of $87,072, for which they could have charged $562,027 using their stated pricing plan to serve AI.

• I just rebalanced the TL20 group of stocks to consider based on a reference price of February 21st. 

• It was tough because stocks are a lot more pricey than when I started the TL20 back on July 15th, 2022.

• At the time, Nvidia was trading for just under 11 times forward revenue projections. Nvidia stock now fetches a multiple of sales of 16.4 times. Pure Storage at the time was trading for 2.5 times revenue, it now trades for almost six times revenue.

• Warren Buffet, I understand, is sitting on a lot of cash and you might want to be too. Remember, the TL20 is meant as a portrait of what is going on in the market, not explicit portfolio advice.

• One of the new names in the TL20 is Broadcom, which last year entered the trillion dollar club. 

“Having just wrapped up a couple days with investors, they're very excited about the story, very excited about the execution.”

Two or three quarters of good results do not a trend make, but I’ll go out on a limb here: Software is back.

In a really rough week for tech earnings — even Nvidia’s robust results couldn’t forestall a sell-off of eight percent in its stock Thursday — a bright spot was the software group, especially Nutanix, Snowflake, and Elastic.

I wrote back in late November that enthusiasm was emerging at numerous sell-side research shops for software stocks as a more stable investment, or at least one with fewer disappointments.

That optimism is being reinforced by this week’s reports, and a surge in share prices even amidst negative market swings.

Shares of Nvidia were initially up over two points in pre-market trading at $134.63, though they have since retreated amidst a three-point decline in the Nasdaq Composite Index.

Today’s slump follows an initial, mild sell-off Wednesday evening following the fourth-quarter report.

The report was very good, but had less upside in revenue and profit than in past quarters, as I noted last night. That  was to be expected given how Nvidia’s business has expanded in size in the past two years.

More important going forward is that the conference call with analysts addressed all the concerns floating around out there, and price targets are once again on the march higher this morning, with the highest I’ve seen so far being $220, from Rosenblatt Securities’s Hans Mosesmann.

On the conference call, Nvidia CEO Jensen Huang and CFO Colette Kress did a fine job of batting away the most pressing worries.

“If you want to be able to have a robot that can do two, three, four, five, ten tasks instead of just a single task, that's where we have the market opportunity.”

“The users of observability, which used to be just IT ops […] are now extending all the way back to the development team.”

Tech shares fell out of bed Monday morning, and it’s reasonable to conclude that a strong factor in the negative trade was the report from TD Cowen analysts on Friday saying that Microsoft is canceling some of its data center leases, and speculation that it may hint at diminished demand. 

As Bloomberg’s Ryan Vlastelica and Newley Purnell reported Monday, analysts Michael Elias, Cooper Belanger and Gregory Williams at Cowen are not entirely clear on the reason for what they’re seeing, writing, “While we have yet to get the level of color via our channel checks that we would like into why this is occurring, our initial reaction is that this is tied to Microsoft potentially being in an oversupply position.”

Obviously, a cut by Microsoft in its data center construction could have ramifications across the tech landscape among suppliers. One prominent supplier, Arista Networks, which counts Microsoft as a ten-percent customer, is down almost six percent today.