Nine names report over seven sessions starting in September, giving the next read on the AI trade after Nvidia (NVDA) kicked off the season last week. The single thing worth watching is the ongoing health of the AI buildout - no one narrow indicator, just whether spending and demand hold up. Dell (DELL) reports first, tomorrow, followed later by Zscaler (ZS), which ties both to the buildout and to keeping these networks secure.
Three buckets, all strong
The nine companies split into three groups: AI hardware, security and data, and automation. All three sectors look strong, and none is expected to clearly outperform the others. The approach here favors long holding periods and betting on founder-led companies to grow and use the strong backdrop, whether the work is data, security, or building out AI "token factories."
Dell (DELL)
Dell's AI server revenue jumped above $16 billion last quarter, and its AI backlog topped $51 billion. That raised the question: is this just a big backlog, or a lasting earnings story? The view is that it is very durable. Michael Dell counts as one of the all-time great founders who sees around corners, and the move into AI servers for agentic workloads fits how he thinks. Super Micro (SMCI) numbers point to expanding margins. Demand grows as more institutions want agentic workflows in both their physical and virtual operations, which on-premises Dell AI servers let them run.
Oracle (ORCL)
Oracle carries a huge remaining performance obligation backlog near $640 billion, but it also spends heavily, has negative free cash flow, and faces concerns about its debt. Is that backlog an opportunity or a financing risk? It is an opportunity. As data centers come online, they work through the backlog and ease the debt worries. Analysis of the life of the financed assets shows the original GPUs running on Amazon (AMZN) - one of the largest running workloads - are still working. Rental prices on legacy GPUs are rising. GPUs look set to be a nine-to-ten-year asset at minimum, so financing them with debt is a smart move.
Oracle is the most disliked stock in the market right now, and the most underappreciated name worth following, with perhaps the biggest upside. Larry Ellison, another founder who saw around corners, started building the data center strategy a couple of years ago. Corporations and government bodies that need highly secure private data live on Oracle, and that business should keep doing well.
Credo (CRDO) and optical
Credo is a less-covered name in a space drawing more attention, tied to the optical connectivity buildout. Optical is one of the hot areas and one of the bottlenecks that should keep strong momentum. Copper cannot carry the bandwidth or the distances, so optical is how higher-scale, higher-bandwidth data centers get built as they grow more power- and bandwidth-constrained.
Zscaler (ZS)
Zscaler's growth outlook was only about 16% to 17%, which drew flags about whether the guidance was conservative or hid a slowdown. It reads as conservative. Jay runs the company with an engineering mindset and is being careful. Demand for zero-trust security is rising fast. Frontier AI models are making it easier to break into networks, and zero trust is one of the best defenses, with Zscaler running one of the best platforms for it. Reacceleration should follow.
What is holding the stocks back
No single name faces the highest bar. Across these AI names, companies have posted good-to-great numbers that still were not enough because expectations sat so high. What is holding back beat-and-raise stocks from moving higher is the macro backdrop - three waves moving through the market, Middle East instability, and the market still digesting comments from Jackson Hole. A single big beat-and-raise will not break the deadlock. The market first needs to pick a direction, and that would let the growthier names move higher.
