Key Takeaways Cloud computing remains a dominant investment theme, particularly so during the AI era. For those seeking exposure, Zacks Thematic Screens can lend a hand. Zacks Thematic Screens lets you dive into 30 dynamic investment themes shaping the future. Whether you're interested in cutting-edge technology, renewable energy, or healthcare innovations, our themes help you invest in ideas that matter to you..Let’s take a closer look at the ‘Cloud Computing’ theme and analyze a stock within, namely Micro ...

Core Insights - ServiceNow's shares have declined by 41.9% over the past three months, underperforming the broader Computer and Technology sector and the Financial-Miscellaneous Services industry [2][3] - Concerns regarding short-term growth, rising AI and cloud spending, and acquisition integration risks have contributed to the stock's decline [3][10] - Despite the downturn, ServiceNow's fundamentals indicate potential for a hold position, supported by strong AI adoption and a discounted valuation [8][20] Company Performance - ServiceNow's stock has underperformed compared to competitors like SAP, Microsoft, and Salesforce, which saw declines of 19.3%, 20.8%, and 20.9% respectively [4] - The company is experiencing increased adoption of its AI-native products, with Now Assist exceeding $600 million in Annual Contract Value (ACV) and new ACV more than doubling year over year [9][10] - The growth in AI adoption is translating into platform expansion, with enterprises increasing AI use for customer service and operations [11] Competitive Landscape - Competitors such as SAP, Salesforce, and Microsoft are embedding service management and workflow automation into their larger enterprise platforms, posing challenges for ServiceNow [5] - ServiceNow is leveraging a rapidly expanding partner ecosystem, including collaborations with Microsoft, OpenAI, and industry-specific alliances, to enhance AI adoption and interoperability [12][13] Valuation and Market Position - ServiceNow's valuation remains attractive, with a forward 12-month Price/Sales (P/S) multiple of 6.48X compared to the industry average of 13.88X, indicating potential for appreciation [14] - The company is facing pressures from elevated AI spending, acquisition integration risks, and weak technical momentum, which may impact margins and investor sentiment in the near term [20]

Core Viewpoint - Marvell Technology is a leading semiconductor company focused on powering data infrastructure for AI, cloud computing, 5G networks, enterprise storage, and automotive technology, emphasizing energy-efficient solutions amid rising AI demand [1]. Company Overview - Founded in 1995, Marvell is headquartered in Santa Clara, California, and operates in over 10 countries, with a market capitalization of approximately $68 billion [2]. Stock Performance - Marvell Technology stock has shown volatility, gaining 2% over the past five days but dropping nearly 4% in the last month and 12% over three months. Year-to-date, MRVL stock is down 6%, with a 27% decrease over the past 52 weeks. Currently, shares are 29% off the 52-week high of $113.54 [3]. - Compared to the Nasdaq Composite, Marvell has underperformed, with a one-month loss of nearly 4% against the index's 3% loss, and a six-month gain of almost 4% trailing the index's more than 7% rise. Over the past 52 weeks, MRVL stock's decline contrasts with the Nasdaq Composite's gains of approximately 18% [4]. Financial Performance - Marvell Technology reported strong third-quarter fiscal 2026 results, with revenue reaching a record $2.075 billion, up 37% year-over-year and exceeding its guidance midpoint by $15 million, beating analyst estimates of $2.07 billion. Non-GAAP diluted EPS was $0.76, surpassing forecasts of $0.74 [6]. - Data center revenue, which constituted 73% of total sales, was a key growth driver due to strong AI demand. GAAP gross margin was 51.6%, while non-GAAP gross margin was 59.7%, reflecting a sequential increase of 30 basis points. Operating cash flow reached a record $582 million, and GAAP net income per share was $2.20, indicating solid profitability [7].

Core Insights - Microsoft experienced a strong stock performance in 2025, driven by its significant investment in artificial intelligence (AI), which integrated AI features across various services, leading to a peak share price of $541 [2][3] - However, the stock has since declined approximately 27% to around $401 per share, with a year-to-date decrease of about 17%, raising concerns among investors [3] Financial Performance - In the fiscal second quarter, Microsoft reported revenue exceeding $81 billion, marking a 17% increase year-over-year, with strong performance in core segments despite market pressures [4] - The Productivity and Business Processes segment grew 16% to $34 billion, while the Intelligent Cloud segment surged 29% to nearly $33 billion; however, the Personal Computing segment saw a 3% decline to about $14 billion [4] - Overall cloud revenue reached $51.5 billion, up 26%, crossing the $50 billion quarterly threshold for the first time, indicating a significant shift towards cloud and AI-driven services [5][8] Profitability Metrics - Microsoft maintained impressive profitability, with gross margins in the high 60% range, operating income rising 21% to $38 billion, and net income increasing 60% to $38.5 billion [6] - Adjusted earnings per share were reported at $4.14, reflecting a 24% increase, showcasing the company's ongoing profitability despite heavy investments in growth [6] Investment in AI - The company is heavily investing in capital projects, expanding data centers and AI capabilities to meet rising demand, which has led to record-level investments in certain areas [7] - This capital expenditure has created short-term pressure on free cash flow as resources are allocated towards scaling operations rather than immediate cash generation [7] - A significant portion, 45%, of Microsoft's $625 billion revenue backlog is linked to commitments with OpenAI, which has raised concerns among investors regarding concentration risk [8]

Core Insights - TC Energy Corporation (TRP) is scheduled to report its fourth-quarter earnings on February 13, with earnings estimated at 65 cents per share and revenues at $2.93 billion [1][7]. Group 1: Recent Performance - In the last reported quarter, TRP's adjusted earnings were 56 cents per share, aligning with consensus estimates, driven by strong performance in its Canadian, U.S., and Mexico Natural Gas Pipelines segments [2]. - TRP's quarterly revenues reached $3.7 billion, exceeding the Zacks Consensus Estimate by $49 million [2]. Group 2: Earnings Surprise History - TRP has beaten consensus estimates in two of the past four quarters, matched in one, and missed once, resulting in an average surprise of 2.49% [3]. - The Zacks Consensus Estimate for fourth-quarter 2025 earnings has experienced one upward and three downward revisions in the past 30 days, indicating a projected 13.33% year-over-year decrease in earnings, while revenues are expected to increase by 14.79% [3]. Group 3: Factors Influencing Q4 Performance - TRP generates income by operating a vast network of pipelines for natural gas and oil transportation, charging fees for these services, and also earns from natural gas storage and power generation [4]. - The company is expected to see improved revenues in the upcoming quarter, but rising expenses may negatively impact its bottom line, as total costs and expenses were higher in the previous quarter [5][7]. Group 4: Earnings Prediction Model - The current model does not predict an earnings beat for TRP this season, as the Earnings ESP is -0.23% and the company holds a Zacks Rank of 3 [6][8].

Group 1 - Alphabet Inc. is planning to raise approximately $15 billion through a US high-grade dollar bond sale, contributing to a trend of increased borrowing among companies involved in the artificial intelligence investment boom [1] - Major cloud-computing companies, referred to as hyperscalers, are projected to invest over $650 billion this year to enhance AI infrastructure, with a significant amount of debt being issued to finance this expansion [2] - Alphabet is structuring its bond sale into as many as seven parts, with initial pricing discussions for the longest bond maturing in 2066 set at a premium of about 1.2 percentage points above Treasuries [3] Group 2 - In addition to the US dollar bond offering, Alphabet is also exploring potential debt offerings in Swiss francs and sterling, including a rare 100-year note [4] - The company announced plans to spend up to $185 billion this year, exceeding previous forecasts, and reported fourth-quarter earnings that surpassed analyst estimates [5] - Capital spending in AI, cloud infrastructure, and data centers is expected to reach a total of $3 trillion by 2029, according to Bloomberg Intelligence [6]

Core Viewpoint - The software sector is currently experiencing a significant selloff, which analysts believe is overblown and not reflective of the actual market conditions. Companies like Palantir, Microsoft, CrowdStrike, Snowflake, and Salesforce are highlighted as potential investment opportunities despite the prevailing negative sentiment [3][4][30]. Group 1: Palantir (PLTR) - Palantir is recognized as a leading software company specializing in data integration and AI-driven decision platforms, with a market cap of $332.6 billion and a stock price increase of 20% over the past year [5][6]. - For Q4 2025, Palantir reported revenues of $1.4 billion, reflecting a 70.5% annual growth rate, and earnings per share (EPS) of $0.25, up 78.6% from the previous year [6]. - Analysts have rated PLTR stock as a "Moderate Buy" with a mean target price of $198.28, indicating an upside potential of about 52.5% from current levels [8]. Group 2: Microsoft (MSFT) - Microsoft, valued at $3.1 trillion, is a major player in the software industry, although its stock has decreased by 5% over the past year [10]. - For the quarter ended December 31, 2025, Microsoft reported revenues of $81.3 billion, a 16.7% increase year-over-year, with cloud business revenues rising by 26% to $51.5 billion [12]. - Analysts have assigned a "Strong Buy" rating to MSFT stock, with a mean target price of $602.57, suggesting an upside potential of roughly 53% [14]. Group 3: CrowdStrike (CRWD) - CrowdStrike is a leading cybersecurity technology company with a market cap of $104.7 billion, although its shares are down 10% over the past year [16]. - The company reported Q3 revenues of $1.23 billion, up 22% year-over-year, and EPS of $0.96, which exceeded the consensus estimate [17]. - Analysts have rated CRWD stock as a "Moderate Buy," with a mean target price of $559.21, indicating an upside potential of about 48% [19]. Group 4: Snowflake (SNOW) - Snowflake operates a cloud-based data platform and has a market cap of $56.6 billion, with its stock down 13% over the past year [21]. - In Q3 2025, Snowflake reported revenues of $1.21 billion, reflecting a 28.5% annual growth, and EPS of $0.35, up 75% from the previous year [22]. - Analysts have given SNOW stock a "Strong Buy" rating, with a mean target price of $277.07, suggesting an upside potential of about 77% [24]. Group 5: Salesforce (CRM) - Salesforce, a pioneer in cloud-based CRM software, has a market cap of $418.6 billion and has seen its stock decline by 43% over the past year [26]. - For the third quarter of fiscal year 2026, Salesforce reported revenues of $10.3 billion, a 9% increase year-over-year, and EPS of $3.25, surpassing estimates [27]. - Analysts have assigned a "Strong Buy" rating to CRM stock, with a mean target price of $329.27, indicating an upside potential of about 73% [29].

Core Viewpoint - STMicroelectronics NV has seen a significant increase in its stock price due to its expanded strategic engagement with Amazon Web Services, aimed at enhancing high-performance computing infrastructure for cloud and AI data centers [1] Company Summary - STMicroelectronics NV's shares rose sharply in pre-market trading [1] - The company is focusing on enabling new high-performance compute infrastructure [1] - The strategic engagement with Amazon Web Services is specifically targeted at cloud and AI data centers [1]

Core Viewpoint - The artificial intelligence (AI) infrastructure boom continues, with Lumentum experiencing significant growth in revenue and profitability, driven by its essential role in AI and cloud computing systems [1][3]. Group 1: Financial Performance - Lumentum's revenue increased by 65.5% year over year, reaching $665.5 million in the second quarter of fiscal 2026 [3]. - The company's adjusted net income surged by 380% to $143.9 million, translating to $1.67 per share, exceeding Wall Street's expectations of $1.41 per share [5]. - The adjusted operating margin improved by 17 percentage points to 25.2% [5]. Group 2: Future Projections - For the fiscal third quarter, Lumentum anticipates revenue growth of approximately 85%, projecting between $780 million and $830 million [6]. - Management expects adjusted operating margins to be between 30% and 31%, with earnings per share forecasted at $2.15 to $2.35 [6]. Group 3: Market Position and Technology - Lumentum is recognized as a foundational engine of the AI revolution, with its technologies powering virtually every AI network through partnerships and as a critical component supplier [4]. - The company's optical and photonic technologies are essential for enabling faster and more efficient data transfer in AI and cloud computing systems [3].

Core Viewpoint - Amazon reported strong earnings with a top-line beat and significant growth in AWS, yet the stock fell due to concerns over a $200 billion capital expenditure plan for 2026 [1][2][6]. Financial Performance - Net sales reached $213.4 billion, reflecting a 14% year-over-year increase [6]. - Operating income was reported at $25.0 billion, or $27.4 billion when excluding one-time charges [6]. - Net income stood at $21.2 billion, translating to $1.95 per diluted share [6]. - AWS sales amounted to $35.6 billion, marking a 24% year-over-year growth [6]. - Free cash flow decreased to $11.2 billion from $38.2 billion a year earlier [10]. - Operating cash flow increased by 20% to $139.5 billion [10]. AWS Significance - AWS continues to be a critical component of Amazon's business, with operating income from AWS at $12.5 billion in Q4 [5]. - The growth of AWS exceeded expectations and accelerated as more capacity became available [5]. Market Reaction - Despite strong earnings, the stock fell by as much as 9% due to investor concerns about the capital expenditure plan [1][2]. - The market is currently evaluating whether major tech companies are shifting from "asset-light" models to capital-heavy operations, which adds to the apprehension surrounding Amazon's spending plans [8]. Strategic Outlook - The $200 billion capital expenditure target is viewed as a necessary investment to maintain competitiveness in AI and cloud services, rather than a sign of financial strength [2][7].