Market Overview - The U.S. stock market experienced a rally in 2023 and 2024, continuing into the first half of 2025, primarily driven by the technology sector and the adoption of generative AI technology [2][4] - The AI-driven rally faced setbacks in early 2025 due to the introduction of the low-cost Chinese DeepSeek AI platform, U.S. export restrictions on high-end AI processors to China, and geopolitical tensions [3][4] AI Infrastructure Investment - The AI infrastructure sector is gaining momentum, with fears related to DeepSeek being overblown [4] - Four major companies are projected to invest $325 billion in AI infrastructure in 2025, marking a 46% year-over-year increase in capital expenditure [7][9] - The total addressable global sovereign AI market is estimated to reach $1.5 trillion [8] Recommended AI Stocks - Five AI stocks are recommended for investment in the second half of the year, all showing strong performance and a Zacks Rank 1 (Strong Buy): Jabil Inc. (JBL), Twilio Inc. (TWLO), UiPath Inc. (PATH), Intuit Inc. (INTU), and Dell Technologies Inc. (DELL) [5][9] Company Insights Jabil Inc. (JBL) - Jabil is benefiting from growth in capital equipment and AI-powered data center infrastructure, with a focus on product diversification [10] - The company has an expected revenue growth rate of 5.9% and earnings growth rate of 18.5% for the next year [12] Twilio Inc. (TWLO) - Twilio is enhancing its cloud communications platform with generative AI, launching Customer AI technology to improve customer engagement [13][15] - The expected revenue growth rate for Twilio is 7.9% and earnings growth rate is 22.3% for the current year [18] UiPath Inc. (PATH) - UiPath offers a comprehensive automation platform with embedded AI capabilities, introducing new generative AI features to enhance automation [19][20] - The expected revenue growth rate for UiPath is 8.5% and earnings growth rate is 5.7% for the current year [21] Intuit Inc. (INTU) - Intuit is experiencing steady revenue growth from its Online Ecosystem and is integrating generative AI into its products to enhance customer insights [22][23] - The expected revenue growth rate for Intuit is 11.7% and earnings growth rate is 13.7% for the next year [25] Dell Technologies Inc. (DELL) - Dell is seeing strong demand for AI servers, securing $12.1 billion in AI server orders, and expanding its cloud services [26][28] - The expected revenue growth rate for Dell is 8.7% and earnings growth rate is 16% for the current year [29]

Market Overview - The AI-driven bull run of 2023 and 2024 faced significant challenges in 2025 due to overstretched valuations, stock inflation, weak economic data, geopolitical conflicts, and concerns over the Trump administration's trade policies, impacting confidence in equities [1] - The technology sector, particularly AI-focused stocks, has been the most affected, but current low valuations present investment opportunities [2] Recommended AI Stocks - Five Internet-based AI stocks with favorable Zacks Rank recommended for purchase on the dip include Arista Networks Inc. (ANET), Fastly Inc. (FSLY), Five9 Inc. (FIVN), HubSpot Inc. (HUBS), and Twilio Inc. (TWLO), all carrying a Zacks Rank 2 (Buy) [3] Arista Networks Inc. (ANET) - Arista Networks is positioned well with a robust network architecture for cloud and AI networking, focusing on proactive products, zero-touch automation, and predictive operations [6] - The company’s AI suite enhances job monitoring and performance issue resolution, with expected revenue and earnings growth rates of 18.7% and 12.8% for the current year, respectively [8] - ANET is currently trading at a 31.6% discount from its 52-week high price [8] Fastly Inc. (FSLY) - Fastly provides cloud computing infrastructure and recently launched Fastly AI Accelerator, optimizing generative AI applications [10][11] - The company has expected revenue and earnings growth rates of 8.7% and 16.7% for 2025, respectively, and is trading at a 40.5% discount from its 52-week high price [12] Five9 Inc. (FIVN) - Five9 offers intelligent cloud software for contact centers, benefiting from the growing adoption of AI tools [13][15] - The expected revenue and earnings growth rates for the current year are 9.6% and 11.7%, respectively, with a 47.6% discount from its 52-week high price [16] HubSpot Inc. (HUBS) - HubSpot provides a cloud-based CRM platform and is experiencing steady adoption from enterprise customers, driven by its AI features [17][18] - The expected revenue and earnings growth rates for the current year are 15.4% and 14.9%, respectively, with a 30.2% discount from its 52-week high price [19] Twilio Inc. (TWLO) - Twilio focuses on generative AI offerings and has launched Customer AI technology to enhance customer engagement [20][21] - The expected revenue and earnings growth rates for the current year are 7.8% and 22.6%, respectively, with a 25.3% discount from its 52-week high price [24]

Market Overview - U.S. stock markets closed the first quarter of 2025 negatively after two years of a bull run, with the technology sector, especially AI-related stocks, being the most affected due to the Federal Reserve's unclear stance on interest rates and recession fears [1] - In the first half of the second quarter of 2025, Wall Street experienced increased volatility due to the Trump administration's tariffs and trade policies impacting the U.S. economy and inflation [2] AI Stock Recommendations - Despite market headwinds, several AI stocks that underperformed in the first quarter have shown significant improvement recently, with five AI stocks recommended for investment based on favorable Zacks Rank [2][3] Company-Specific Insights AppLovin Corp. (APP) - AppLovin is focused on providing a software platform for mobile app developers, enhancing marketing and monetization [6] - The company reported strong fundamentals, with an expected revenue growth rate of 24.3% and earnings growth rate of 85.2% for the current year, alongside a 25.6% improvement in earnings estimates over the last 30 days [8] Amphenol Corp. (APH) - Amphenol specializes in connectivity solutions utilizing AI and machine learning technologies, benefiting from a diversified business model [9][10] - The company anticipates a revenue growth rate of 32.3% and earnings growth rate of 40.7% for the current year, with a recent 1.5% increase in earnings estimates [11] Arista Networks Inc. (ANET) - Arista Networks is positioned for growth with its AI networking solutions and a focus on cloud and data center architecture [12][13] - The expected revenue growth rate is 18.7% and earnings growth rate is 12.8% for the current year, with a 4% improvement in earnings estimates recently [14] Broadcom Inc. (AVGO) - Broadcom is experiencing strong demand for its networking products and AI accelerators, with projected AI revenues for Q2 2025 expected to rise 44% year-over-year to $4.4 billion [15][16] - The company forecasts a revenue growth rate of 21% and earnings growth rate of 35.5% for the current year, with a 0.6% increase in earnings estimates [19] Twilio Inc. (TWLO) - Twilio is a leading provider of cloud communications and is focusing on generative AI to enhance customer engagement [20][21] - The expected revenue growth rate is 7.8% and earnings growth rate is 21.3% for the current year, with a 6% improvement in earnings estimates [24]