Industry Overview - The AI-driven bull run that began in 2023 and 2024 has continued into 2025, with strong momentum in the AI infrastructure segment [2] - The demand for AI infrastructure remains robust, supported by a bullish market scenario [2] Capital Expenditure Trends - Four of the "magnificent 7" stocks are set to invest $380 billion in 2025 for AI infrastructure development, representing a 54% year-over-year increase in capital spending [3] - Projections indicate that AI infrastructure capital expenditure will exceed $1 trillion by 2028, with estimates reaching a cumulative total of $5 trillion by 2030 [4] Investment Recommendations - Five small and mid-cap stocks are highlighted as potential beneficiaries of the AI boom in 2026: Calix Inc. (CALX), Qualys Inc. (QLYS), Innodata Inc. (INOD), Five9 Inc. (FIVN), and UiPath Inc. (PATH) [5][10] Company Profiles Calix Inc. (CALX) - CALX provides cloud and software platforms for communications service providers, integrating AI to enhance operations and subscriber engagement [8][9] - Expected revenue and earnings growth rates for CALX are 12.4% and 35.3%, respectively, for the next year [11] Qualys Inc. (QLYS) - QLYS specializes in cloud-based cybersecurity solutions, benefiting from increased demand amid rising cyber threats [12][15] - The company has a projected revenue growth rate of 7.7% and earnings growth of 6.5% for the next year [16] Innodata Inc. (INOD) - INOD plays a crucial role in the AI ecosystem by providing high-quality data for training language models, with expected revenue and earnings growth rates of 24.1% and 35.6%, respectively [18][21] - The company supports five of the seven major hyperscalers and is expanding its capabilities in AI services [19][20] Five9 Inc. (FIVN) - FIVN offers intelligent cloud software for contact centers, with a focus on AI-driven solutions that enhance customer interactions [22][25] - The expected revenue and earnings growth rates for FIVN are 9.5% and 8.3%, respectively, for the next year [26] UiPath Inc. (PATH) - PATH provides a robotic process automation platform that leverages AI to streamline operations, with new generative AI features enhancing its offerings [27][28] - The company anticipates revenue and earnings growth rates of 9.3% and 14.2%, respectively, for the next year [30]

Group 1 - Calix (CALX) is currently outperforming its peers in the Computer and Technology sector, with a year-to-date performance of approximately 60.7%, compared to the sector average return of 29.7% [4] - The Zacks Rank for Calix is 1 (Strong Buy), indicating a positive outlook based on earnings estimates and revisions [3] - Over the past three months, the Zacks Consensus Estimate for Calix's full-year earnings has increased by 231.4%, reflecting improved analyst sentiment [4] Group 2 - Calix belongs to the Internet - Software industry, which consists of 168 companies and is currently ranked 59 in the Zacks Industry Rank, outperforming the industry's average gain of 9.2% this year [6] - Another notable stock in the Computer and Technology sector is CyberArk (CYBR), which has returned 39.7% year-to-date and has a Zacks Rank of 2 (Buy) [5] - The Security industry, to which CyberArk belongs, is ranked 62 and has seen a year-to-date increase of 15.6% [6]

Core Insights - Home Telecom experienced a 5X increase in subscriber upgrades within six months after launching lifestyle-based residential Wi-Fi packages with Calix SmartHome, resulting in nearly 500 percent growth in monthly recurring revenue and over 17 percent increase in average revenue per user (ARPU) per upgrade [1][6]. Group 1: Subscriber Engagement and Revenue Growth - Home Telecom's partnership with Calix Success led to the reinvention of their SmartHome packages, focusing on subscriber interests and lifestyles, which included the introduction of SmartTown for community Wi-Fi [2][4]. - The launch of five distinct managed Wi-Fi packages, including the new 5-gig Tech Giant package, has attracted subscribers with high-performance connectivity needs [3][6]. - Targeted marketing campaigns utilizing Calix Cloud resulted in a 40 percent increase in multi-gig take rates within 30 days, demonstrating effective subscriber engagement strategies [6]. Group 2: Operational Efficiency and Innovation - Home Telecom simplified whole-home Wi-Fi adoption through "all-in" plans, which included installation of mesh systems and setup of the CommandIQ mobile app, enhancing cybersecurity and content controls for subscribers [6]. - Insights from Calix Cloud enabled personalized offerings and accelerated the adoption of multi-gig packages, showcasing the importance of data-driven strategies in enhancing subscriber experiences [2][6]. Group 3: Recognition and Future Outlook - Home Telecom received the Calix Collins Marketing Innovation Award for their effective marketing campaigns that significantly boosted subscriber engagement and service adoption [5]. - Calix's president emphasized that the future of broadband lies in enhancing subscriber experience and engagement, indicating a shift in industry focus from speed and price competition to value-driven service [7].

Industry Overview - The artificial intelligence (AI) infrastructure segment is experiencing significant momentum, driven by a bullish demand scenario, which is expected to transform the world over the next five years [2]. Company Summaries Innodata Inc. (INOD) - Innodata is positioned as a key partner in the AI revolution, providing essential data for training advanced language models, with a long-term growth outlook supported by major tech companies and diverse customer bases [6][7]. - The company has launched a GenAI Test and Evaluation Platform to validate large language models, enhancing its capabilities in AI data and integration [8][10]. - Innodata's expected revenue and earnings growth rates for the next year are 24.1% and 35.6%, respectively, with a Zacks Consensus Estimate for earnings improving by 1.7% over the last 30 days [11]. Calix Inc. (CALX) - Calix provides cloud and software platforms for communication service providers, integrating AI to enhance operations and subscriber engagement [13][14]. - The company has an expected revenue growth rate of 12.4% and an earnings growth rate of 35.3% for the next year, with the Zacks Consensus Estimate for earnings improving by 8.3% over the last 60 days [14]. Five9 Inc. (FIVN) - Five9 specializes in contact center software solutions, benefiting from increased subscription revenues and the adoption of AI tools in its services [16][19]. - The company has an expected revenue and earnings growth rate of 9.7% and 8.3%, respectively, for the next year, with the Zacks Consensus Estimate for earnings improving by 1.3% over the last 30 days [21].

Core Viewpoint - Calix (CALX) has experienced significant selling pressure, resulting in an 11.3% decline over the past four weeks, but analysts anticipate improved earnings in the near future [1] Group 1: Technical Analysis - The Relative Strength Index (RSI) is utilized to determine if CALX is oversold, with a current reading of 28.02 indicating potential for a price reversal [2][5] - Stocks oscillate between overbought and oversold conditions, and the RSI helps identify when a stock may be undervalued due to excessive selling [3] Group 2: Fundamental Analysis - Analysts have raised earnings estimates for CALX significantly, with a 231.4% increase in the consensus EPS estimate over the last 30 days, suggesting potential price appreciation [7] - CALX holds a Zacks Rank 1 (Strong Buy), placing it in the top 5% of over 4,000 ranked stocks, indicating strong potential for a turnaround [8]

Core Insights - CoastConnect has achieved significant growth by leveraging Calix Success, reporting a 20% increase in subscriber acquisition and 60% app adoption within 18 months [1][10] - The partnership with Calix is transforming CoastConnect from a traditional broadband provider into an experience leader, focusing on AI-driven operations to enhance community value [2][8] Subscriber Growth and Engagement - CoastConnect reported a 20% growth in subscriber acquisition and 60% adoption of the CommandIQ app within 18 months [1][10] - The company reached 20% of its first-year SmartBiz goals within weeks, indicating strong demand for its managed services [10] Operational Efficiency - CoastConnect improved operational efficiency by streamlining workflows across Calix Cloud, enhancing customer support, network management, and marketing outreach [10] - The company exceeded security-focused managed service adoption by 140% past target, indicating effective restructuring of their residential portfolio [10] Workforce Development - CoastConnect completed 53 courses through Calix University, enhancing workforce expertise and preparing teams for AI-enabled operations [10] - Calix is launching Learning Unlimited, an all-inclusive education model to further support workforce upskilling [3][10] Future-Ready Initiatives - CoastConnect is re-engaging the Smart Start for Managed Services program to support a SmartTown deployment, aiming to deliver secure community-wide Wi-Fi [7] - The company plans to activate Business Insights Services to turn subscriber usage patterns into actionable growth plans, establishing a foundation for future AI-driven operations [7]

Core Viewpoint - Rio Tinto has entered into a Joint Development Agreement with Calix to support the construction of a demonstration plant for Zero Emissions Steel Technology in Western Australia, which aims to facilitate lower-emissions steel production using Pilbara iron ores [1] Group 1 - The demonstration plant will be located in Kwinana, south of Perth, at a site previously designated for Rio Tinto's Bio project [1] - The collaboration with Calix is part of Rio Tinto's efforts to innovate in sustainable steelmaking technologies [1]

Core Viewpoint - Calix (CALX) has shown a 6.4% increase in stock price over the past four weeks, with a mean price target of $79.5 indicating a potential upside of 26.3% from the current price of $62.94 [1] Price Targets and Analyst Estimates - The mean estimate consists of six short-term price targets with a standard deviation of $5.05, where the lowest estimate is $75.00 (19.2% increase) and the highest is $85.00 (35.1% increase) [2] - A low standard deviation among price targets suggests a high degree of agreement among analysts regarding the stock's price movement [9] Earnings Estimates and Market Sentiment - Analysts have shown increasing optimism about CALX's earnings prospects, with three estimates revised higher in the last 30 days, leading to a Zacks Consensus Estimate increase of 231.4% [12] - CALX holds a Zacks Rank 1 (Strong Buy), placing it in the top 5% of over 4,000 ranked stocks based on earnings estimates [13] Caution on Price Targets - Solely relying on consensus price targets for investment decisions may not be wise, as analysts' ability to set unbiased targets has been questioned [3][7] - Price targets should be treated with skepticism, as they can mislead investors more often than guide them [10]

Core Insights - CDE Lightband has successfully launched Calix SmartBiz, surpassing its first-year goals and driving growth in the small business sector through effective strategies and offerings [1][3][5] Group 1: Product and Service Offering - SmartBiz provides flexibility for small business subscribers, catering to various needs from simple guest Wi-Fi to secure networks for point-of-sale systems [2][7] - The integration of SmartBiz with the Calix Broadband Platform allows for secure, managed Wi-Fi tailored for small businesses, enhancing network management and reliability [4][6] Group 2: Implementation and Strategy - CDE Lightband deployed SmartBiz in just six weeks with support from Calix Success, establishing a dedicated small business organization across sales, engineering, and support [3][5] - The company made SmartBiz a standard feature in every bundle, which has helped maintain a market share of 40-45% while simplifying purchasing for small businesses [5][6] Group 3: Leadership and Vision - Leadership at CDE Lightband emphasizes the importance of reliability and simplicity in service offerings, adapting to the unique needs of different types of businesses [7] - Calix's President highlighted CDE Lightband's success as a model for service providers to differentiate themselves through value rather than price, showcasing the potential for community-focused growth [8]

Core Insights - Calix, Inc. reported better-than-expected third-quarter financial results, with adjusted earnings of 44 cents per share, surpassing market estimates of 24 cents per share [1] - The company's quarterly sales reached $265.437 million, exceeding expectations of $246.100 million [1] - For the fourth quarter, Calix expects adjusted EPS of $0.35-$0.41, compared to estimates of $0.20, and projects sales of $267.000 million-$273.000 million against expectations of $250.980 million [2] Stock Performance - Following the earnings announcement, Calix shares rose by 9.3%, closing at $68.04 [2] Analyst Ratings - Consensus rating for Calix is "Buy" with a highest price target of $88.00 and a lowest price target of $30.00, leading to a consensus price target of $65.09 [3] - Needham analyst Ryan Koontz maintained a "Buy" rating and raised the price target from $70 to $82 [7] - Rosenblatt analyst Mike Genovese also maintained a "Buy" rating and increased the price target from $65 to $85 [7]