J P M O R G A N North America Equity Research 27 June 2025 Semiconductors 2025 CIO Survey: Results Suggest Sustained Strong AI Spending Intentions And Supports Our View Of 30-35% Revenue CAGR For AI/Accelerated Compute Semis Over Next Several Years J.P. Morgan's recent CIO Survey (see presentation published this morning here) asked 168 CIOs, who manage ~$123B of annual enterprise IT spending power, their company-specific intentions over the next several years. Key questions asked that were relevant for semi ...

Core Insights - The technology sector has been the top performer over the past decade, significantly outpacing other sectors, with an average annual return of 20.9% [14] - Major trends driving investment in technology include semiconductors, big data, the Internet of Things, cloud computing, machine learning, and artificial intelligence [1][4] Group 1: Technology Sector Performance - Technology investing is synonymous with growth investing, responsible for five of the top ten performing stocks in the market over the past decade [4] - The technology sector has consistently outperformed the S&P 500, with a 7 percentage point advantage over the index [14] - Nearly 32% of the S&P 500 Index's weight is assigned to the information technology sector, with tech and tech-adjacent stocks exceeding 41% [16][17] Group 2: Characteristics of Tech Stocks - The technology sector includes companies involved in IT services, software development, technology hardware distribution, and semiconductor manufacturing [11] - The classification of tech stocks has become complex due to the emergence of the communication services sector, which includes former tech companies like Meta Platforms and Alphabet [8][9] Group 3: Investment Rationale - Companies across all sectors are increasingly reliant on technology for growth, leading to sustained demand for tech stocks [12][13] - The trend of technology integration into various industries is expected to continue, reinforcing the growth potential of tech investments [12] Group 4: Identifying Top Tech Stocks - A quality screen for selecting tech stocks includes criteria such as a long-term estimated earnings-per-share growth rate of at least 15% and expected revenue growth of at least 15% annually over the next two years [19][20] - Stocks must have at least ten analysts covering them and a consensus Buy rating of 2.5 or lower to be considered for investment [20][21]

Core Insights - EMCOR Group, Inc. (EME) is experiencing significant growth in the data center sector, driven by long-term demand in the digital infrastructure ecosystem [1][3] - The company has expanded its presence in U.S. data center markets through organic growth and strategic acquisitions, with total remaining performance obligations reaching $11.75 billion, a 28.1% year-over-year increase [1][8] - Demand from hyperscale and enterprise clients, particularly for cloud services and generative AI workloads, is a key driver of this growth [2][8] Company Performance - EMCOR's data center work surged 112% year-over-year, contributing $3.6 billion to its total backlog [1][8] - The company operates in over 16 electrical and mechanical geographies, up from five years ago, indicating substantial market expansion [2] - EMCOR's prefabrication and virtual design capabilities position it well for large-scale data center projects, with strong client visibility extending into 2026 [3] Industry Context - Other industry players like Comfort Systems USA (FIX) and MasTec, Inc. (MTZ) are also poised to benefit from the growing demand for data center infrastructure [4] - Comfort Systems reported a record first-quarter 2025 with earnings up over 75% and revenues rising 19% year-over-year, supported by a backlog of $6.9 billion [5] - MasTec is capitalizing on the rapid expansion of data center development, driven by investments in power infrastructure and fiber connectivity [6] Stock Performance and Valuation - EMCOR's stock has increased by 43.6% in the past three months, outperforming the Zacks Building Products - Heavy Construction industry's 39.5% rise [7] - The stock is currently trading at a premium with a forward 12-month price-to-earnings ratio of 21.64X [10] - Earnings estimates for 2025 and 2026 remain unchanged at $23.59 and $25.47 per share, indicating year-over-year growth of 9.6% for 2025 and 8% for 2026 [12]

Automation and streamlined operations enable greater speed, transparency, and value-added services to corporate clientsAUSTIN, Texas, June 30, 2025 /PRNewswire/ -- New Oracle Trade Finance and Supply Chain Finance cloud services are empowering banks to provide corporate and small- and medium-sized enterprise (SME) clients faster access to financing through streamlined trade processes. Oracle has introduced these new cloud services to unify operations and help manage the entire trade and supply chain finance ...

Tustin, CA, June 30, 2025 (GLOBE NEWSWIRE) -- CalEthos Inc., (OTCQB:GEDC), (“CalEthos” or the “Company”), today announced the formation of TerraVolt Infrastructure Inc. (TerraVolt), a subsidiary that was recently established to meet the escalating demand for sustainable, baseload, clean energy solutions for AI infrastructure and large-scale data centers. TerraVolt’s solution is an innovative Infrastructure-as-a-Service (IaaS) Platform that will integrate behind-the-meter geothermal power plants with pre-per ...

Group 1 - The article highlights the importance of weekly announcements from Sunday to Thursday, which include significant stock market updates such as suspensions, investments, acquisitions, and performance reports, marked in red for easy identification [1] - A company is currently researching digital solutions related to stablecoins, blockchain, cloud computing, cross-border payments, and AI [1] - Another company has completed the acceptance of a 1.6 billion yuan order for computing power operations [1] - A company has signed agreements for strategic cooperation in areas such as all-solid-state lithium-ion batteries, rare earth permanent magnets, and small metals [1]

Group 1: Pershing Square Capital Management's Portfolio Overview - A significant portion of Pershing Square Capital Management's portfolio, specifically 41.6%, is invested in three companies: Alphabet, Uber Technologies, and Chipotle Mexican Grill [2] - Alphabet constitutes approximately 14% of the portfolio, with over 5.7% in class A shares and nearly 8.3% in class C shares [4][5] - Uber Technologies represents 18.5% of the portfolio, being the largest holding as of the first quarter [8] - Chipotle Mexican Grill accounts for about 9.1% of the portfolio [12] Group 2: Alphabet Insights - Alphabet's stock underperformed in the first half of the year despite strong financial results, likely due to market concerns over regulatory risks, particularly an antitrust lawsuit [4][5] - The company is well-positioned for future growth in cloud computing and artificial intelligence, which are still in early stages [6] - Alphabet's YouTube platform and its competitive advantages, such as network effects and switching costs, contribute to its attractiveness for long-term investors [7] Group 3: Uber Technologies Insights - Uber has transformed into a profitable company, with first-quarter revenue growing 14% year over year to $11.5 billion and net income reaching $1.8 billion [9] - The company's competitive edge is reinforced by its network effect, as more drivers enhance its attractiveness to clients, significantly outpacing competitor Lyft in trips and gross bookings [10] - Long-term prospects for Uber are promising, especially as younger generations are driving less, increasing demand for ride-hailing services [11] Group 4: Chipotle Mexican Grill Insights - Chipotle's stock has faced challenges in 2025 due to potential tariff impacts and weak foot traffic, but it remains a consistently profitable business with strong margins [12][13] - The company is actively expanding, having opened 57 new locations in the first quarter, with a long-term goal of reaching 7,000 locations in the U.S. and Canada [14] - Despite current struggles, the recent dip in stock price presents a buying opportunity for long-term investors [14]

Core Insights - Two enterprise software giants, Oracle and Intuit, are gaining investor attention as AI transforms business solutions [1][2] - Both companies are integrating AI capabilities into their platforms to drive growth and have shown strong financial performance [1][2] Oracle (ORCL) Overview - Oracle is focusing on large enterprise customers with comprehensive cloud infrastructure and database solutions [2] - The company reported a 27% increase in total cloud revenues to $6.7 billion and a 52% surge in infrastructure-as-a-service revenues to $3 billion [4] - Remaining performance obligations reached $138 billion, a 41% year-over-year increase, indicating strong revenue visibility [4] - Oracle's multi-cloud strategy allows customers to run databases across various platforms, addressing market needs for flexibility [5] - The company plans to increase capital expenditures to over $25 billion in fiscal 2026 to meet demand, which may pressure near-term cash flows [6] - The Zacks Consensus Estimate for fiscal 2026 earnings is $6.71 per share, reflecting a 1.1% increase over the past 30 days [7] Intuit (INTU) Overview - Intuit is experiencing growth driven by its AI-driven transformation of financial software solutions, with a 15.1% revenue increase [8] - The company has a recurring revenue model, with 77% of total revenues coming from subscriptions, providing stability [11] - TurboTax Live segment is expected to see 24% customer growth and 47% revenue growth for the fiscal year [11] - Intuit's partnership with Google Cloud enhances its tax preparation capabilities, and its upcoming AI agents promise to revolutionize small business operations [10] - The Zacks Consensus Estimate for fiscal 2025 earnings is $20.06 per share, up 0.4% over the past 30 days [12] Valuation and Performance Comparison - Oracle shares have gained 27.7% year to date, outperforming Intuit's 23% rise [13] - Intuit commands a higher valuation premium with a price-to-sales ratio of 10.4x compared to Oracle's 8.89x [16] - Intuit's predictable subscription revenue model and expanding total addressable market justify its higher valuation [16] Investment Conclusion - Intuit is positioned as the superior investment opportunity for the second half of 2025 due to its AI-driven platform strategy and diversified revenue streams [19] - The focus on the underserved small-to-medium business market presents a larger growth runway compared to Oracle's enterprise approach [19] - Investors are advised to buy Intuit stock to capitalize on its growth trajectory while holding Oracle for a better entry point [19][20]

Core Insights - Investors are focusing on IT services stocks that balance innovation and stability, with Unisys Corporation (UIS) and International Business Machines Corporation (IBM) as key players in this sector [1] Unisys Corporation (UIS) - Unisys is undergoing a strategic transformation aimed at expanding solution-based revenue streams, operational optimization, and enhancing brand relevance in AI and cybersecurity [2] - The Device Subscription Services (DSS) and Digital Workplace Solutions (DWS) are major growth drivers, with significant contracts signed for large-scale device management [2] - The backlog in the DWS segment is growing at a double-digit pace year over year, positioning Unisys for sequential growth in the latter half of 2025 [3] - Unisys is enhancing its security portfolio with Post-Quantum Cryptography solutions and AI-enabled frameworks, which are expected to drive revenue growth despite current discretionary spending softness [4] - The company aims for $100 million in pre-pension free cash flow in 2025 through operational improvements and cost control [5] - The Zacks Consensus Estimate for UIS's EPS indicates a year-over-year increase of 28.9%, with earnings estimates for 2025 revised upward by 132% in the past 60 days [11] International Business Machines Corporation (IBM) - IBM is enhancing its AI portfolio by integrating governance and security into a unified platform, marking a significant step toward responsible AI deployment [6] - The software segment, which constitutes nearly 45% of IBM's business, achieved 9% growth in Q1 2025, driven by strong demand for Red Hat and AI-powered tools [8] - IBM's shift to subscription and platform-based services has resulted in an 80% recurring revenue base in software, contributing to high-margin gains [10] - The Zacks Consensus Estimate for IBM's 2025 EPS implies a year-over-year growth of 6%, with earnings estimates revised upward by 0.4% in the past 60 days [12] - IBM shares have surged 32.8% year-to-date, reflecting strong market performance [13] Comparative Analysis - Unisys is positioned for upside due to its transformation-driven momentum and focus on innovation in AI and cybersecurity, while IBM offers stability and scale but may have more moderate upside potential [17][18] - UIS is trading at a forward P/E ratio of 5X, below its median of 10.59X, while IBM's forward sales multiple is at 25.85X, above its median of 21.47X [15] - Unisys's emphasis on recurring revenues and emerging technologies provides a compelling turnaround narrative, contrasting with IBM's established market position [18][20]

Core Insights - Ciena Corporation has partnered with Telxius to achieve the first 1.3 terabit-per-second single-wavelength optical transmission over the 6,600-km Marea submarine cable, addressing the rising global demand for high-capacity bandwidth driven by AI and cloud computing [1][4] Group 1: Technology and Innovation - Ciena's WaveLogic 6 Extreme (WL6e) technology is pivotal in this achievement, offering a single-wavelength transmission capacity of up to 1.6 Tb/s while reducing power consumption and space requirements by up to 50% [2][10] - The system achieved a record spectral efficiency of 7.0 bits/s/Hz, enhancing data transmission efficiency across the Atlantic [3] Group 2: Market Position and Growth - Ciena is recognized as a leading choice for network operators expanding their networks for fast data center and cloud connections, leveraging its comprehensive portfolio of optical systems and software services [5] - The WL6e solution is estimated to have an 18 to 24-month lead over competitors, gaining traction with 24 new customers in the fiscal second quarter, totaling 49 customers shortly after its release [6][10] Group 3: Customer Adoption and Expansion - Ciena has also added 10 new WaveLogic 5 Extreme customers, bringing the total to 344, with notable service providers like Lumen and Korea Telecom utilizing this advanced technology [7] - WaveLogic 5 Nano pluggables are now being shipped to 178 cloud and service provider customers, indicating strong market demand [7] Group 4: Financial Performance and Challenges - Ciena's stock has risen 65% over the past year, outperforming the Zacks Communication-Components industry's growth of 36.9% [9] - The company faces challenges from new tariffs and trade tensions, which could impact material costs and margins, with an expected $10 million in tariff-related costs each quarter in fiscal 2025 [8]