S&P500, 9 Consecutive Weeks of Gains and New High Rally...NVIDIA, Taiwan Computex Momentum Expected [Wall Street Newsletter]
Speakers
Park Myung-seok
— Curator
Summary
Park Myung-suk reviews the US market's 9-week rally, highlighting AI infrastructure expansion beyond GPUs into servers, memory, and networking. He identifies momentum in CPU stocks (AMD), memory (MU, WDC), and a software resurgence (IGV, SNOW). Specific picks include Dell, Meta, Alphabet, and Amazon based on valuation, AI catalysts, and margin strength.
- S&P 500 has risen for 9 consecutive weeks, with IT sector weight exceeding dot-com levels.
- AI infrastructure demand is broadening from GPUs to CPUs, memory, storage, and networking.
- Dell reported strong AI server orders, driving a 32% surge and analyst target upgrades.
- CPU stocks like AMD are outperforming memory due to server upgrade cycle.
- Memory prices are expected to rise further, especially legacy DDR4, benefiting Micron and SanDisk.
- Software sector revived on AI agent data usage, with IGV ETF breaking $100 and Snowflake as the trigger.
- Meta is attractive at under 20x PE with B2B AI and wearables strategy.
- Alphabet and Amazon show strong cloud revenue growth and profitability from AI investments.
Trade Ideas
CPU momentum stronger than memory, AMD gains
AMD has shown stronger momentum than memory stocks recently, with CPU demand outpacing memory. The company is tied to Intel in the CPU space and has gained 153% over the period. The CPU/server rally is continuing, and AMD is well-positioned to benefit.
Dell benefits from AI server upgrade cycle
Dell is undergoing a transformation from legacy PC/server maker to a key AI infrastructure player. The company's long-term contracts, market share expansion, and margin improvement were confirmed by its earnings, leading JPMorgan to raise the target to $500. The installed base of older servers still needs upgrading, providing ongoing demand. Trump's administration also supports Dell via government contracts.
Memory pricing rising on AI server demand
Memory demand is driven by the CPU/server boom. Morgan Stanley expects DDR4 (legacy memory) prices to rise 20% in the second half, as both new and old memory are needed. Micron and SanDisk (Western Digital) benefit from this pricing power and overall demand from AI infrastructure.
Software sector revival, IGV ETF breakout
The software sector is experiencing a revival, with the IGV ETF breaking above $100 and recording its best month since 2001. Fund flows into software ETFs were strong in May, with over $1.5 billion inflows. The re-emergence of software is driven by AI agent usage, interest rate declines, and a shift away from SaaS-pocalypse fears.
Snowflake proves AI agents boost data usage
Snowflake triggered the software resurgence. The company's strong earnings showed that AI agents are actually increasing data consumption, not bypassing data layers as feared. This changed the market's perception of AI's impact on software companies, reversing the SaaS-pocalypse narrative.
Meta cheap valuation plus B2B AI push
Meta Platforms is attractively valued at under 20x P/E. It is expanding into enterprise AI (B2B) and strengthening its wearables strategy (smart glasses, physical AI). The combination of low valuation and new growth vectors makes it compelling.
Alphabet cloud accelerating, margins strong
Alphabet's cloud business is accelerating, closing the gap with Amazon, and its operating margins are strong due to AI utilization. Analysts raised targets, citing AI investment risk diminishing as cloud revenue grows. The growth in remaining performance obligations (RPO) supports the outlook.
Amazon already profitable on AI investments
Amazon shows strong profitability even when capital expenditure is excluded from cost assumptions. Unlike many other companies still relying on blue-sky projections, Amazon already generates solid earnings from its AI and cloud investments. This validates its build-up and supports future margin expansion.
