Teresa Rivas

As both May and first-quarter reporting season draw to a close, tech looks like one of the month's clear winners, with the Nasdaq Composite up more than 9%. Yet that doesn't mean there won't continue to be winners and losers in the sector, says one analyst.

This past week brought another blowout quarter from Nvidia, Wall Street's favorite artificial-intelligence play. The report capped a recent resurgence for the trade, following the announcement of several sovereign AI deals using U.S. chips and increasing faith that the sun isn't setting on the era of American exceptionalism in tech.

The results helped Mizuho Securities analyst Jordan Klein "feel like many of the dark storm clouds over Nvidia bull thesis are quickly lifting," he wrote on Friday, and that the "upside path is not a question of 'if,' but much more 'when.'" Given his increased confidence that the company can log earnings per share of $6 next year, that could support a stock price in the range of $160 to $180.

That said, Klein notes that he's "struggling to get excited" elsewhere in tech.

For example, he notes that he would eschew all online travel agencies save Booking, given the uncertain outlook for consumer demand. " NetApp, HP Inc., Hewlett Packard Enterprise, and even Apple are all names I would avoid and think they continue to lag in Tech on combo of worries over gross margin and top line pressure" given factors such as tariff costs and ongoing weakness in enterprise demand, Klein writes.

Klein thinks that most investors are overly bearish on Marvell Technology, whose results continue to leave investors underwhelmed, but admits that the only way to debunk the bear arguments will be for it to deliver steady beat-and-raise quarters, which admittedly will take time.

That said he does think that there are more immediate investible ideas in tech beyond Nvidia.

He likes Dell, which just reported results, due to "AI new signings, massive backlog growth, and AI server revs going from $1.9 billion to an estimated $7 billion quarter over quarter" that will allow the company to beat expectations in the coming quarters. Given the collaboration with Oracle, he's upbeat about that company as well, as Oracle will finally "get much needed capacity in coming months and can start to monetize massive bookings into revenue growth.

Cisco Systems is one of Klein's long ideas too, as he thinks it's more likely the stock can push above $70 than not, and Coherent Corp. is another stock where he thinks that the upside risk outweighs the potential downside.

Klein isn't the only strategist arguing that investors should stay picky. Overall, however, if more tech stocks are winners than losers, that's good news for the broader market -- as tech giants dominate the S&P 500 and AI enthusiasm has been one of the pillars of the past few years' rally. After the wild swings in April and May, who wouldn't want to go back to the good old days of 2024?

Write to Teresa Rivas at teresa.rivas@barrons.com

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May 30, 2025 13:14 ET (17:14 GMT)

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