Zacks Market Edge Highlights: ETN, STRL, SMCI, CEG and NVDA

Chicago, IL – February 3, 2025 – Zacks Market Edge is a podcast hosted weekly by Zacks Stock Strategist Tracey Ryniec. Every week, Tracey will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life. To listen to the podcast, click here: https://www.zacks.com/stock/news/2407673/should-you-buy-the-ai-stocks-after-the-sell-off

Welcome to Episode #432 of the Zacks Market Edge Podcast.

(0:30) – Should You Be Buying The AI Stock Sell-Off?
(5:00) – Tracey’s Top Stock Picks For Your Portfolio Right Now
(22:45) – Episode Roundup: ETN, STRL, SMCI, CEG, NVDA
Podcast@Zacks.com

Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds, and ETFs and how it impacts your life.

This week, Tracey is going solo to look at AI stocks after the DeepSeek panic.

DeepSeek is a Chinese AI start-up that has, allegedly, come up with a cheaper and easier way to train AI. It may result in less spending on the AI infrastructure, including the chips, datacenters, and the build out inside the datacenters like racks as well as cooling.

On Jan 27, 2025, in panic selling, the infrastructure AI stocks sold off. Some were down over 20% on the session. Since Jan 27, they have rebounded but remain weak.

Tracey looked at 5 of the infrastructure stocks to ask: should you be buying after the sell-off?

1. Eaton Corp. ETN

Eaton is in power management. It’s tied into the AI Revolution trade as it makes server racks and does thermal management. Earnings are expected to rise 11.5% in 2025. However, Eaton will report earnings on Jan 31, 2025, so be sure to check for earnings estimate revisions after the earnings report is out.

Shares of Eaton fell 12.6% in the four days after the DeepSeek panic. Eaton trades with a forward price-to-earnings (P/E) ratio of 26.4. A P/E under 15 is considered a value stock.

Is this a buying opportunity in Eaton?

2. Sterling Infrastructure, Inc. STRL

Sterling Infrastructure is a mid-cap company with a market cap of $4.5 billion. It is involved in building the datacenters, and other infrastructure projects. Sterling is expected to grow earnings by 24% in 2024 and another 8% in 2025.

Shares of Sterling have been hit hard in the sell-off. It’s down 25.3% in the 4 days after the DeepSeek panic. Sterling trades with a forward P/E of 21.8.

Is this a buying opportunity in Sterling Infrastructure?

3. Super Micro Computer, Inc. SMCI

Super Micro Computer produces racks and server systems. Earnings are expected to soar 43% in fiscal 2025.

Shares of Super Micro Computer are down 15.9% in the 4 days after the DeepSeek panic. It’s the cheapest of the infrastructure stocks. Super Micro Computer trades with a forward P/E ratio of just 8.8. A P/E under 15 is considered a value and Super Micro Computer is under 10.

Is this a buying opportunity in Super Micro Computer?

4. Constellation Energy Corp. CEG

Constellation Energy generates and sells electricity in the United States. Datacenters with high-speed AI chips need a lot of energy to operate. Constellation Energy’s earnings are expected to rise 68.2% in 2024 and another 10.5% in 2025.

Shares of Constellation Energy fell 11.1% in the 4 days after the DeepSeek panic. Constellation Energy trades with a forward P/E of 31.4.

Is this a buying opportunity in Constellation Energy?

5. NVIDIA Corp. NVDA

NVIDIA makes the semiconductor chips that make AI possible. Earnings are expected to rise 126.2% in fiscal 2025 due to strong demand for AI chips.

But what will happen if DeepSeek’s method means companies need fewer NVIDIA chips?

Shares of NVIDIA fell 15.5% in the 4 days after the DeepSeek panic. It has gotten cheaper. NVIDIA now trades with a forward P/E of 42. It was trading near 50x before the sell-off.

Is this a buying opportunity in Constellation Energy?

Tune into this week’s podcast to find out.

[In full disclosure, Tracey owns shares of STRL in her personal portfolio and in Zacks Value Investor portfolio.]

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