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
Kevin 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
Predictions (1)
Kevin 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
Predictions (1)
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
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