Committee stocks on the move: GE Vernova and Crowdstrike
Summary
The Investment Committee discusses GE Vernova's disappointing earnings and high valuation, leading to caution. Joe remains bullish on cybersecurity stocks Crowdstrike and Datadog, and sees Microsoft as bottoming. Liz broadly recommends the cybersecurity sector via the CIBR ETF.
- GE Vernova drops 7% after earnings guidance misses lofty AI-related expectations.
- Panelist Jenny avoids adding to GE due to rich valuation (80x EBITDA) and potential competition.
- Joe Terranova stays bullish on Crowdstrike and Datadog as cybersecurity spending holds firm despite SaaS disruption.
- Joe also sees Microsoft potentially bottoming and expects relative outperformance in July.
- Liz argues cybersecurity demand will keep growing and recommends the CIBR ETF.
Ideas
Avoid GE at current rich valuation.
Not adding to GE Vernova because the stock is trading at nearly 80 times EBITDA, margins are not robust in a very capital-intensive business, and competition will eventually come. However, long-term backlog may turn into cash flow.
Cyber spending resilient, own CRWD and DDOG.
Cybersecurity spending remains essential for enterprises even as they reconsider other SaaS spending due to AI disruption, benefiting Crowdstrike and Datadog. Nothing has changed this dynamic.
Microsoft bottoming, relative outperformance in July.
Microsoft may see relative outperformance in July and may be bottoming due to its overwhelming balance sheet and market force.
