Andrew Arons Offers MSFT, NVDA & BE Bull Cases Amid Volatile Market

[00:00:00]I do want to welcome in our next guest, though, Andrew Arenes, joining us this morning, founder and partner at Synergy Advisory Management Group. Andrew, great to have you back on the show. Now, we're looking at a mixed day, but overall a down day. The Nasdaq tracking for its fourth negative day in five, but you say you view this as a textbook summer sell-off. What gives you the confidence it's not something more than that?

[00:00:24]>> Well, we're having low volume here, and it's definitely looking uh to be just like a quiet, you know, summer sell-off.

[00:00:31]There's no panic here in the market. Uh we're going to see some of the best earnings we've seen in years, and I think uh it's going to be kicked off with uh we'll see Google and Tesla, right, tonight. So, uh we'll see where that looks, but I think it's going to look very, very positive for the market.

[00:00:47]Um you know, like always, stocks don't go straight up, and we've seen a lot of volatility.

[00:00:53]And um you know, especially in the chip sector, and in my opinion, uh that's well overdone and a great opportunity uh to get in on some of these stocks if you haven't already. And you know, I highlighted a couple of stocks that I think uh could do very, very well.

[00:01:10]They're big names, and you know, a lot of people have obviously heard of the big ones, but some of them are really cheap here.

[00:01:17]Um and I think that um you know, we have a lot to look forward to in this market.

[00:01:25]>> Just a second, but I want to ask a follow-up here to your thoughts that we've got legs in this rally. You even said you think we've got 5 to 10% upside coming our way over the next couple months. You also highlighted that we don't have a lot of volatility, and I've had I was just looking at the VIX. We're at 17 right now and some change. Uh as we look at that, I've had conversations with other guests about how they think the market is being a little complacent, and that the VIX should perhaps be higher with everything that we have going on in the macro backdrop. Yes, we've got earnings, but we've even seen some great earnings being met with negative reactions. So, uh walk me through your thesis to this 5 to 10% upside over the next couple months, and also what could potentially endanger it?

[00:02:09]>> Well, what's happening in my opinion is, you know, obviously a lot of the spending that's been going on in the CapEx is scaring a lot of people, giving people a lot of anxiety here on Wall Street. And you know, one of the stocks I highlighted today is Microsoft, uh just as an example. Uh you know, it hasn't looked that great. It's almost had almost a 20% slide. Uh it's one of the worst performers of the year. And you know, they're going to come out next week and report, and it looks like there's a lot of worry over you know, the spending and and and how that's going to play out. But I think that it may be somewhat of a uh a good thing because uh Wall Street has uh set Microsoft's expectations at a pretty low level here, and I think that they're going to beat pretty big next week, and that could be something that's going to catapult the market uh going much higher. Uh I see um you know, most of the stocks that I come on and say I think can go up easily 20%, and I think uh Microsoft's going to make a very, very nice move, which could spur the market. Uh another one of my picks that I like, obviously, is uh uh Nvidia.

[00:03:20]And uh I think that right now they haven't really done much at all this year. The stock looks just way too cheap in my opinion. Uh we're treating this company right now in the market like it's just an average company. I mean, but the stock has barely moved, and uh you know, uh a couple of the uh uh brokerage, you know, banks out there have a buy rating on uh uh Nvidia with a $350 price target, quite a bit higher than where we are now. And I think that, you know, uh 500's not out of the realm for a Microsoft.

[00:03:56]You know, even in the next, you know, it [laughter] could be by the end of the year. I really think we're going to see a really big leg up because I think a lot of these companies are going to really, really surprise here. And you know, right now there's a little bit of negativity in the market with like the spend and everything, but I think that that's going to subside when these earnings come out and the numbers look really, really good.

[00:04:18]>> Yeah, I mean, you're not alone in that sentiment. I was just pulling up some of the analyst action on Microsoft here.

[00:04:23]The average price targets at 556 for for Microsoft. So, I mean, certainly seeing a lot of potential upside similar to what you're saying, but I mean, a tale of two very different charts when we're looking at Microsoft compared to Nvidia.

[00:04:36]Microsoft are the worst perform I think the worst performer in the mag seven.

[00:04:39]They're down nine almost 20% year-to-date. Nvidia's been pretty much trading sideways, but Andrew, as we look at Nvidia, I mean, it's trading at one of its lowest valuation multiples relative to earnings. I suppose there's one argument to be made that there has been more reasonable expectations placed on Nvidia, but then at the end of the day, it's also Nvidia. So, you know, we have an argument to be made that their product cycles for their newer products, Vera Rubin, Grace Blackwell, have really yet to even take off. But we've gotten great numbers from Nvidia before and not seen a positive reaction. So, what is it going to take? I know we're months out still from Nvidia. They're at the end of the season, but what is it going to take? What do they have to say to make it enough for the street to react positively?

[00:05:28]>> Well, I think that, you know, they're going to have to basically say that the the the um product cycle is really going to start to ramp up here. We're going to really see some things happen pretty quickly as we move in here. I mean, Blackwell and Rubin chips are expected uh you know, to sell trillion dollars worth of these chips. I mean uh you know, there's a lot of a lot of stuff going on here and um I think, you know, we're going to start to see some acceleration.

[00:06:00]A lot of these big companies like Apple in the past, you know, they kind of trade stagnant for a while. They really don't do much and then all of a sudden you see a pretty big move. Uh we saw that uh with a with Palantir, which is a stock that hasn't done much right now.

[00:06:15]But all of a sudden, you know, all of a sudden we see something happen a little bit. We get a little bit more positive feelings from earnings and what's coming down the road in a little bit more of a positive way and all of a sudden the start the stock starts to really really take off. And you know, with all these big stocks, money keeps flowing in uh once there's any positive news.

[00:06:36]>> And Andrew, really quick here, I want to get your last pick in. Uh you like Bloom Energy. They've had a pretty significant sell-off of late. They're down 34% in the last month, but over the last 52 weeks, still up 775%.

[00:06:47]I mean, an incredible chart. What do you like about Bloom?

[00:06:50]>> Well, I mean, Bloom is just in a really really great space here, especially with the fact that we can't, you know, put all the um uh electrical companies on the grid fast enough and Bloom's kind of company that can come in and uh straighten that out.

[00:07:07]They uh build these mini modular power plants that sit right at the data centers, providing instant clean electricity, uh using natural gas or hydrogen. And this is going to be uh needed uh especially, you know, I think the the 40% drop that we saw on the stock was pretty much, you know, uh with regards to the um uh uh New York moratorium with regards to um you know, these new data center builds.

[00:07:36]But uh I think that the federal government is going to really step in here and say something because, you know, this is part of really what's going on uh in the future and we need to have um, you know, an AI infrastructure that's in place uh for for security purposes in this country uh down the road. So, they have a $25 billion partnership with Brookfield, that's huge, and I think you're going to see uh a lot of these projects uh uh future projects for Blue and I think that the uh stock will probably, in my opinion, be at all-time highs once this all gets straightened out.

[00:08:16]>> Andrew, appreciate you joining us this morning and bringing those picks for us.

[00:08:20]Andrew Arons, founder and partner of Synergy Advisory Management Group.