Stifel says AI infrastructure remains supply-gated into earnings

Investing.com -- Stifel said AI infrastructure companies remain supply-constrained rather than demand-limited heading into the June and July quarter reporting season. The firm expects most companies in its coverage to continue their pattern of beating estimates and raising guidance.

The SOX index fell about 8% in the first week of July. Stifel attributed the decline to multiple factors including Meta's reported cloud entry, HBM supply headlines, and a more hawkish Federal Reserve repricing. The firm views the pullback as a valuation correction within an intact cycle, not a demand break.

Stifel said backlog, long-term agreements, and capacity commitments continue extending across compute, optical, and EMS sectors. The firm noted that Samsung's record preliminary second quarter results were read negatively by the market, suggesting that in-line or slightly above results may be interpreted as misses.

For processors, Stifel named NASDAQ:NVDA as its preferred large-cap stock into the June and July earnings season. The firm expects ongoing Blackwell strength and early orders for Vera Rubin into the third fiscal quarter. NASDAQ:NVDA trades at about 25 times fiscal 2028 estimates.

NASDAQ:AMD was highlighted as another preferred stock for accelerated compute. The firm noted AMD's EPYC server-CPU franchise has a total addressable market lifted to over $120 billion by 2030, representing over 35% compound annual growth rate. AMD has two 6GW commitments with OpenAI and Meta for its MI450 and Helios products. AMD's July 23 "Advancing AI" event was identified as a potential catalyst.

In optical components, Stifel shifted its near-term preference to NYSE:LITE over NASDAQ:COHR. Both companies now trade at roughly 29 times calendar 2027 consensus earnings per share. LITE remains the primary merchant EML supplier into a supply and demand imbalance that management sizes at about 30% and widening.

For supply chain companies, Stifel highlighted NYSE:CLS, NYSE:JBL, and NASDAQ:TTMI. CLS trades at about 23 times fiscal year 2 estimates with management citing awarded backlog as the strongest in its history. JBL raised its fiscal 2026 AI-related revenue to about $13.6 billion from $9 billion last year and trades at 19 to 20 times fiscal year 2 estimates. TTMI is down about 30% from its June peak and printed a 1.41 times book-to-bill ratio with a $787 million backlog, up 52% year-over-year.

For equipment and test companies, Stifel named NASDAQ:CIEN and NASDAQ:VIAV. CIEN sizes its addressable market at roughly $50 billion by 2029 across WAN, data-center interconnect, and scale-across layer. The company's backlog stands at a record $7.7 billion.

You May Also Be Interested In

• Conagra Brands falls on weak fiscal 2027 earnings outlook
• Highway Holdings (HIHO) Misses Q4 EPS by 24c
• Gevo targets doubled EBITDA estimate, eyes North Dakota expansion