Stocks our strategists [music] feel are poised to deliver positive returns are featured now in their top stock picks of the week. Hello everybody. Welcome back to this week's edition of top stock picks of the week.I'm Ethan Feller, stock strategist here at Zach. And today I'm going to cover everyone's favorite the biggest company in the world AI leader Nvidia. Um and then after me my colleague Jeremy Mullen will tell you about another stock.So let's get right into it. So we have Nvidia. We know it's the uh ...

Core Insights - The article emphasizes a fundamentals-based approach to value investing, highlighting the importance of long-term durability and affordability in company selection [1] Group 1: Investment Philosophy - The company believes that low multiple stocks are often misunderstood as cheap, advocating for a focus on companies with steady long-term growth and strong balance sheets [1] - There is an acknowledgment of the risks involved in investing in successful companies, particularly the potential to overpay, which underscores the significance of valuation [1] - The article suggests that in certain situations, the vast development runway of a company can make immediate price considerations less critical [1]

Market Overview - Wall Street experienced a significant rally over the past three years, primarily driven by advancements in artificial intelligence (AI) technologies, which continued into early 2026 [1] - Recent geopolitical tensions, rising crude oil prices, and persistent inflation have led to skepticism among financial experts regarding the sustainability of the AI trade [1] Technology Sector Performance - The Nasdaq Composite index fell by 4.2% in the past month, while the Technology Select Sector SPDR (XLK) decreased by 3% [2] - Despite these challenges, several large-cap technology stocks have shown positive performance, with recommendations for four stocks expected to gain in the near future [2] Recommended Stocks - The recommended stocks include Dell Technologies Inc. (DELL), Ciena Corp. (CIEN), Lumentum Holdings Inc. (LITE), and Samsara Inc. (IOT), all carrying favorable Zacks Ranks of 1 (Strong Buy) or 2 (Buy) [3] Dell Technologies Inc. (DELL) - DELL has secured $34.1 billion in AI server orders, indicating strong demand driven by digital transformation and interest in generative AI applications [6][9] - The company reported $9 billion in revenue from AI server demand in Q4 2025, with a customer base exceeding 4,000 across various industries [7] - DELL's expected revenue and earnings growth rates for the current year (ending January 2027) are 24.2% and 24%, respectively, with a recent 0.6% improvement in earnings estimates [11] Ciena Corp. (CIEN) - CIEN has gained 2 points of optical market share year-to-date, driven by AI-led demand from cloud and service provider customers [12] - The company raised its fiscal 2026 revenue outlook to $5.7-$6.1 billion, reflecting nearly 24% growth at the midpoint, up from a prior estimate of 17% [13] - CIEN's expected revenue and earnings growth rates for the current year (ending October 2026) are 27.1% and over 100%, respectively, with a 13.4% improvement in earnings estimates [14] Lumentum Holdings Inc. (LITE) - LITE designs and manufactures optical technologies for telecommunications and data centers, benefiting from the growth of AI and cloud computing [15] - The company reported significant revenue growth driven by demand for AI infrastructure connectivity solutions [16] - LITE's expected revenue and earnings growth rates for the current year (ending June 2026) are 77% and over 100%, respectively, with a slight 0.1% improvement in earnings estimates [18] Samsara Inc. (IOT) - Samsara provides solutions that connect physical operations data to its connected operations cloud, utilizing wireless sensors and cloud-based analytics [19] - The company's Connected Operations Cloud includes capabilities for AI, workflow analytics, and data security [20] - Samsara's expected revenue and earnings growth rates for the current year (ending January 2027) are 21.9% and 21.4%, respectively, with a notable 19.3% improvement in earnings estimates [21]

Core Viewpoint - Samsara Inc. (IOT) has been upgraded to a Zacks Rank 1 (Strong Buy), indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Movement - The Zacks rating system is based on the consensus measure of EPS estimates from sell-side analysts, reflecting the company's changing earnings picture [1][2]. - Changes in earnings estimates are strongly correlated with near-term stock price movements, influenced by institutional investors who adjust their valuations based on these estimates [4][6]. Samsara Inc. Specifics - The recent upgrade for Samsara Inc. suggests an improvement in its underlying business, which is expected to drive the stock price higher due to investor confidence [5][10]. - Analysts have raised their earnings estimates for Samsara Inc. significantly, with the Zacks Consensus Estimate increasing by 254.2% over the past three months, projecting earnings of $0.68 per share for the fiscal year ending January 2027 [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [7]. - Only the top 5% of Zacks-covered stocks receive a "Strong Buy" rating, indicating superior earnings estimate revisions, which positions Samsara Inc. favorably for potential market-beating returns [9][10].

Core Insights - Brown Advisory Mid-Cap Growth Strategy underperformed the Russell Midcap® Growth Index in Q4 2025 primarily due to stock selection, particularly missing out on Palantir Technologies Inc (PLTR) [1] - The Strategy aims for solid risk-adjusted returns by investing in high-quality companies with market capitalizations between $2 billion and $50 billion [1] Company Overview: Samsara Inc. (NYSE:IOT) - Samsara Inc. is a provider of Internet of Things solutions, enabling businesses to connect and manage data through its connected operations platform [2][3] - As of March 23, 2026, Samsara's stock closed at $33.20 per share, with a one-month return of 27.35% and a 52-week loss of 22.08% [2] - The company has a market capitalization of $18.94 billion [2] Market Position and Growth Potential - Samsara is positioned as a technology leader in a fragmented and growing market, which is still in the early stages of digital adoption [3] - The company is expected to evolve into a multi-product growth story, potentially growing faster than market expectations [3] Financial Performance - For the financial year 2026, Samsara generated revenue of $1.6 billion, reflecting a 30% year-over-year increase or 29% in constant currency [4] - Despite its potential, the company is not among the 40 most popular stocks among hedge funds, with 48 hedge fund portfolios holding its stock at the end of Q4 2025, up from 42 in the previous quarter [4]

Core Viewpoint - Brokerage recommendations, particularly for Samsara Inc. (IOT), show a strong average brokerage recommendation (ABR) of 1.52, indicating a consensus leaning towards buying the stock [2]. Brokerage Recommendation Summary - Samsara Inc. has an ABR of 1.52, which is between Strong Buy and Buy, based on recommendations from 21 brokerage firms [2]. - Out of the 21 recommendations, 15 are classified as Strong Buy, accounting for 71.4%, while one is classified as Buy, making up 4.8% of the total recommendations [2]. Zacks Rank and Earnings Estimates - The Zacks Consensus Estimate for Samsara Inc. has increased by 254.2% over the past month to $0.68, indicating strong analyst optimism regarding the company's earnings prospects [14]. - The significant change in the consensus estimate, along with other factors, has led to a Zacks Rank of 1 (Strong Buy) for Samsara Inc., suggesting a favorable outlook for the stock [15].

Core Insights - Samsara Inc. (NYSE:IOT) is recognized as a promising growth stock, particularly after the announcement of new AI-powered coaching features for its Connected Operations Platform aimed at enhancing fleet safety [1] Group 1: AI-Powered Features - The new features include tools that automate and scale fleet safety, providing a comprehensive view of road risks while reducing administrative burdens on managers [1] - The proprietary risk model monitors over 45 factors to classify safety events, directing high-risk incidents to managers and less critical ones to drivers for self-service coaching [1] Group 2: Fleet Management Enhancements - Updates for fleet managers include 'AI Role Play' and 'AI Guided Coaching', which facilitate simulated difficult conversations and structured feedback frameworks [2] - A new Safety Program Overview acts as a command center for leadership to track coaching program performance, compliance, and behavior changes driven by automation [2] - Early adopters like Ecolab have reported significant time savings, managing thousands of coaching events in a single month [2] Group 3: Driver Support - The platform now offers automated start-of-the-day audio briefings for drivers, helping them anticipate risks and celebrate safety milestones [3] - Features such as two-way audio coaching during trips and post-trip AI Avatar support create a continuous safety loop aimed at improving driver behavior and potentially lowering insurance premiums through reduced crash rates [3] Group 4: Company Overview - Samsara Inc. provides solutions that connect physical operations data to its connected operations platform, serving various industries including transportation, construction, logistics, and healthcare [4]

Industry Overview - The fleet telematics market is valued at $10.42 billion in 2025 and is expected to reach $21.95 billion by 2032, indicating significant growth potential in the sector [1] Company Developments - Samsara was awarded $30.3 million in damages from a favorable arbitration ruling on February 3, which was disclosed in its updated Form 10-K [2] - Samsara has an annual recurring revenue (ARR) of $1.9 billion as of recent filings, while Motive, a private company, has a $500 million ARR run rate as of late 2025 [3] - The arbitration ruling against Motive was based on false-advertising claims related to a Virginia Tech Transportation Institute study, which was described as an independent benchmark of AI dashcams [4] Legal Proceedings - The arbitration decision included a permanent injunction against Motive and was related to false claims about product capabilities, with the arbitrator finding Motive liable for misleading advertising [6] - Motive won an ITC case where Samsara sought exclusion orders on AI dashcams and gateways over three patents, with the administrative law judge finding no Section 337 violation [2]

Financial Performance - For the fiscal year ended January 31, 2026, the company's revenue was $1,618.6 million, up from $1,249.2 million in the previous fiscal year, representing a growth of approximately 29.5%[43] - The company incurred a net loss of $9.1 million for the fiscal year ended January 31, 2026, resulting in an accumulated deficit of $1,619.1 million[110] - The company increased its operating expenses to $1,294.7 million for the fiscal year ended January 31, 2026, compared to $1,140.9 million for the fiscal year ended February 1, 2025[138] - Approximately 14% of total revenue in fiscal year 2026 was generated from international markets, highlighting growth potential outside the United States[63] - Subscription revenue is recognized ratably over the term of contracts, meaning changes in sales or renewals may not be immediately reflected in revenue, affecting future financial performance[230] Customer Base and Engagement - As of January 31, 2026, the company had over 12,000 Core Customers, each contributing $25,000 or more in annual recurring revenue (ARR), with approximately 85% of total ARR coming from these customers[38] - The company focuses on larger customers, with 3,194 large customers each representing over $100,000 in ARR, accounting for approximately 61% of total ARR[38] - As of January 31, 2026, over 90% of Core Customers and over 95% of customers with over $100,000 in ARR subscribed to multiple Applications, indicating strong cross-sell opportunities[60] - Customer subscription renewals are critical, with contracts typically lasting three to five years, and past instances of non-renewal have been noted[116] - The company’s free-trial sales model builds trust and demonstrates the platform's capabilities, aiding in customer acquisition[84] Product and Technology Development - The Data Platform processed over 25 trillion data points in fiscal year 2026, enabling significant AI-driven insights for operational improvements[39] - The Connected Operations Platform integrates data from IoT devices and third-party systems, providing a unified view of operations and enabling actionable insights[45] - The platform's AI-powered insights help customers achieve higher asset utilization and lower operational costs, including reduced insurance costs and emissions[39] - The Connected Operations Platform is designed to support enterprise-grade physical operations, utilizing edge computing for real-time data processing[53] - The company is investing significantly in AI technology to enhance its Connected Operations Platform, but risks associated with AI, such as flawed algorithms and data quality issues, could impact its reputation and operating results[155] Operational Efficiency and Impact - A Fortune Global 500 logistics company using the platform achieved a 65% decrease in harsh driving incidents and a 49% reduction in accident-related costs[42] - One of the largest flooring manufacturers saved over $7 million annually by reducing total mileage by 25% through route optimization[46] - A top retailer in Canada saved 46,000 gallons of fuel, equating to a reduction of 469 metric tons of CO2 emissions in just four months[46] - The Connected Operations Platform helped prevent thousands of driving accidents, digitized millions of processes, and eliminated billions of pounds of CO2 emissions in fiscal year 2026[53] - The Connected Asset Maintenance application enables a shift from reactive repairs to data-driven preventative maintenance, maximizing asset uptime[68] Market and Competitive Landscape - The company expects additional competition as its market grows and may choose to enter or expand into new markets[93] - Intense competition exists in the market, with various vendors offering similar solutions, impacting demand for the company's offerings[127] - The company may face increased competition from established and emerging companies, which could lead to reduced margins and loss of market share[130] - The company emphasizes the importance of maintaining a superior pace of innovation to support its competitive position in the market[93] - The competitive position of the Connected Operations Platform relies on compatibility with a wide variety of data sources and infrastructure, which is critical for maintaining business performance[162] Regulatory and Compliance Risks - The company is subject to various laws and regulations, including those governing privacy, data security, and ELD certification, which may impact its operations and compliance costs[100] - The company faces risks from various U.S. privacy laws, which could lead to costly investigations and significant liability[214] - Regulatory compliance is critical, as failure to comply with laws and regulations could result in significant penalties and harm customer relationships[203] - The company has obtained certification for all of its ELD models in Canada, but failure to maintain this certification could negatively impact its reputation and customer base[203] - Increased regulatory scrutiny in the technology industry may lead to substantial fines and changes in business practices, adversely affecting the company's operations[208] Intellectual Property and Legal Matters - The company holds a portfolio of 202 issued patents and 16 allowed patents pending issuance in the United States, with expiration dates ranging from 2035 to 2044[95] - The company has filed lawsuits against competitors for patent infringement and trade secret misappropriation, indicating an active approach to protecting its intellectual property[189] - Ongoing litigation related to intellectual property rights could be costly and may distract management from core business priorities[188] - The company may face challenges in enforcing its intellectual property rights, particularly in jurisdictions with less protective laws[185] - Future acquisitions may increase the company's exposure to intellectual property risks, as there may be less visibility into the development processes of acquired technologies[193] Growth Strategy and Challenges - The company aims to expand its customer base and increase application adoption, leveraging a customer-centric innovation approach[60] - The growth strategy includes selling additional subscriptions to existing customers, but success depends on anticipating industry evolution and enhancing existing applications[117] - The company relies heavily on direct sales, with plans to expand its sales organization domestically and internationally, particularly targeting large organizations[119] - Effective management of growth is essential, as rapid revenue growth has placed demands on management and operational resources[126] - The ability to attract new customers depends on timely enhancements and new technologies for the Connected Operations Platform, which may not achieve market acceptance[139] Supply Chain and Operational Risks - The ongoing global silicon component shortage has resulted in increased costs and delays in shipments, affecting the company's IoT devices[132] - The company relies on a limited number of joint design manufacturers and suppliers, which may adversely affect its ability to sell subscriptions to its Connected Operations Platform and impact margins[132] - The company faces risks from geopolitical tensions, particularly between China and Taiwan, which could disrupt its supply chain and manufacturing operations[133] - Disruptions in cellular and satellite networks could impede the functionality of the company's solutions, affecting profitability and operational results[159] - The company may experience lost sales opportunities or delayed revenue due to insufficient supply and inventory management of its IoT devices[136]

Core Viewpoint - Samsara Inc. (IOT) shows a significant improvement in earnings outlook, making it an attractive investment option as analysts continue to raise earnings estimates for the company [1][3]. Earnings Estimate Revisions - The upward trend in earnings estimate revisions reflects growing analyst optimism, which is expected to positively impact the stock price [2]. - For the current quarter, Samsara Inc. is projected to earn $0.13 per share, marking an 18.2% year-over-year increase, with a 21.43% rise in the Zacks Consensus Estimate due to three upward revisions [7]. - For the full year, the earnings estimate is $0.68 per share, representing a 21.4% year-over-year change, with six estimates moving higher and no negative revisions [8]. Zacks Rank - Samsara Inc. has achieved a Zacks Rank 1 (Strong Buy) due to favorable estimate revisions, indicating strong agreement among analysts [9]. - Stocks with Zacks Rank 1 and 2 are shown to significantly outperform the S&P 500, highlighting the potential for Samsara Inc. [9]. Stock Performance - The stock has gained 16.1% over the past four weeks, driven by solid estimate revisions and positive earnings growth prospects [10].