Behind the video
AI Stocks: Broadcom, Snowflake, HPE Earnings
Overall Thesis
AI adoption among early-stage companies is widespread with 95% deploying AI agents, showing strong business confidence improvements, while earnings from Broadcom, Snowflake, and HPE provide near-term catalysts for AI-focused stocks.
Narratives
Kevin briefly notes Five Below delivered a triple beat on earnings including EPS, net sales, and comp sales growth, but offers no extended thesis or price target on the stock.
Key Arguments
- Adjusted EPS beat (168 vs 139 expected)
- Comp sales up 14% versus 10% expected
AVGOBroadcomKevin views Broadcom as fundamentally strong but temporarily punished for a small Q4 revenue guidance miss, noting exceptional margins, huge free cash flow, and a cheap valuation relative to growth. He believes the stock could be worth close to $1,000 based on its margin profile, though he flags the large debt load as a lingering concern.
Key Arguments
- Revenue accelerated 85% year-over-year and 33% sequentially, an acceleration in growth rate
- Net margins near 55% with $13.6 billion free cash flow in a single quarter
- Trading at roughly a 0.9 PEG ratio versus ~34% four-year growth, which he calls 'cheap cheap for these margins'
- Company has stopped taking on new debt and is now paying it down
Risks acknowledged
- Second consecutive quarter of missed revenue guidance
- $57 billion in long-term debt is 'the one thing that stops me from wanting to buy this company'
- Weaker pricing power as cost of revenue grew faster than revenue
Predictions (1)
SNOWSnowflakeKevin is excited about Snowflake's earnings beat and post-earnings short squeeze but considers the stock significantly overvalued, estimating a more reasonable fair value near $200 versus its post-earnings trading price. He attributes much of the pop to short covering rather than fundamentals, citing elevated short interest and a sub-1% free cash flow yield.
Key Arguments
- Adjusted EPS beat expectations by 37%, and the stock surged ~20% in after-hours trading
- Operating expenses (16.7% growth) are rising slower than revenue (35% growth), indicating improving operating leverage
- Elevated short interest (3.89 days to cover) suggests a short squeeze rather than pure fundamentals drove the move
- Trading around a 4.5x PEG ratio, which he calls expensive, 'like cyber' valuations
Risks acknowledged
- Free cash flow yield is less than 1%, which he calls 'not that good'
- No cybersecurity-like moat, unlike higher-valued cyber stocks
- Balance sheet is 'not great, not terrible'
Predictions (1)
"Yeah, probably closer to like 200 bucks, you know, this is really really gone running."
Kevin notes HPE delivered a clean beat across EPS, revenue, and free cash flow, plus an expanded Oracle partnership, but the stock still fell in after-hours trading. He treats it as a minor storyline compared to Snowflake and Broadcom, without forming a strong directional view.
Key Arguments
- Q3 adjusted EPS beat by 19.3% and Q4 forecast beat by 16.8%
- Raised fiscal year revenue growth guidance to 34-37%
- Expanded AI data center networking partnership with Oracle, including issuing Oracle warrants
Risks acknowledged
- Stock fell in after-hours despite the beat, with no clear explanation given ('down 7%... I don't actually see why')
The video opens with an inserted clip referencing GameStop's historical short squeeze and retail trading community power, framed as commentary on Wall Street shorting practices rather than a current investment thesis. No forward-looking prediction about GameStop is made by Kevin himself in this segment.
Key Arguments
- References that GameStop was heavily shorted historically
- Highlights the collective power of online retail trading communities (subreddits, Discord)
Hedges & Caveats
- Host acknowledges losing money on recent trades
- HPE and Five Below earnings described as 'not the biggest thing' of focus
- Market volatility and dip-buying sentiment suggests uncertain near-term conditions
- Data from Mercury report on early-stage companies may not represent broader market