why stocks are skyrocketing [spoiler: it's just getting started]
Overall Thesis
The stock market is surging due to strong chip export data and undervalued hardware/tech stocks are poised for continued gains, with Meta and AMD specifically positioned for significant upside.
Narratives
Kevin argues Nvidia is dirt cheap on a PEG basis compared to peers and that a breakout above technical resistance at $227 will trigger a rapid rally to over $300 as the broader hardware sector re-rates higher.
Key Arguments
- Nvidia trades at roughly a 0.65 PEG ratio, less than half of AMD's valuation
- New Reuben chip architecture reduces memory dependency by boosting bandwidth 10x while RAM only doubles
- Nvidia's credit backing makes data center financing cheaper for partners, increasing desirability of Nvidia-linked plays
Kevin believes Meta remains deeply undervalued even after its rally, citing his own higher-than-consensus EPS growth estimates driven by the Muse AI agent product and superior advertising positioning versus agent-driven competitors.
Key Arguments
- Wall Street forecasts only 9.61% EPS growth next year, which Kevin thinks is too low
- Kevin estimates Meta could average closer to 20% EPS growth over the next four years due to Metamuse and the 'Watermelon' release
- Meta's 3.2 billion daily users dwarf competing agent platforms like Grok, preserving its advertising value as AI agents reduce ad exposure elsewhere
Predictions (1)
Kevin views AMD as still relatively cheap on a PEG basis despite its huge run and approaching $1 trillion market cap, though he expects near-term momentum to rotate away from AMD and Dell toward other hardware names.
Key Arguments
- AMD trades around a 1.5 PEG ratio, which Kevin considers inexpensive given its margins
- AMD is nearing a $1 trillion market cap and was still up 9% on the day discussed
Predictions (1)
Kevin notes Dell has had a phenomenal rally alongside AMD, though he expects momentum to eventually shift toward other hardware names.
Key Arguments
- Dell has rallied to all-time highs alongside AMD amid the hardware demand surge
Kevin cites Broadcom as another example of a hardware stock trading at roughly half the valuation multiple, implying it is undervalued relative to the broader hardware rally.
Key Arguments
- Broadcom trades at roughly half the PEG valuation multiple of other hardware names
Kevin thinks Cerebras may be forming a bottom given its wafer-scale chip technology positioning it well for robotics and fast token delivery applications.
Key Arguments
- Cerebras' wafer-scale engine technology is positioned for ultra-fast token delivery, competing with Nvidia's Grok-related efforts
- Useful for robotics applications requiring fast processing to avoid erratic robot behavior
Predictions (1)
Kevin believes the Tesla Semi's move toward production is an underappreciated catalyst that isn't yet priced into the stock, unlike Optimus which he believes already carries significant investor hope.
Key Arguments
- Recent Tesla Semi production drops will lead investors to start underwriting the Semi as a business upshot
- Optimus already has a lot of hope priced into the stock, but the Semi does not
Predictions (1)
Kevin believes the Nasdaq-100 (via the Q's) has bottomed after bouncing off key support levels and will break through $800 by year-end as peak fear fades and hardware stocks re-rate higher.
Key Arguments
- The Q's bounced exactly off 700 during peak Fed rate hike fear and has since climbed to 715 and then 735
- Peak fear around CPI, Iran, and the Fed is behind us, supporting continued upside
Predictions (1)
Hedges & Caveats
- Acknowledges potential bubbliness in valuations long-term
- References monitoring NScale IPO and Anthropic IPO as canaries in the coal mine
- Discusses valuation concerns despite bullish near-term outlook
- Past performance references (AMD called at 452, Meta called on August 28th) used to establish credibility rather than as new predictions