THREE beaten down bangers for the next decade

Welcome to AI Collision 💥,

In today’s collision between AI and our world:

• Market ripped
• Three deep value plays
• Dehydrated water

If that’s enough to get the deep value showing, read on…

AI Collision 💥

Yesterday was carnage. Today might be marginally in the green. But chances are things will remain rocky for a few weeks. There’s no clear timeframe as to when the volatility will end, so it’s important as I’ve been saying the last few days to keep a calm head, look for the value in stocks that are deep value now and deploy capital into those you find with long term potential, in critical areas of the market that are going to shape our future.

The bad news is that AI and tech focused stocks have been hit hardest in this last week. I mean, Apple was down almost 10%, Amazon nearly 9%… anything that sells internationally (so more or less everything) was down heavily yesterday.

Non-tech too, poor old Nike with massive operations in Vietnam was down over 14%.

Oof.

Then again, maybe their next move is to build more factories in America and build more products there? That is the point Trump is making, you’re an American company, but you’re making everything offshore.

We all know why, and maybe that does need to change. But if it changes, then inflation rips higher. So how do you solve that? Automation, innovation, deflationary technologies? Well, in that sense yes, that’s exactly what you would do.

And that’s why I’m saying that long term buys now are important. Because if this great reshoring of manufacturing back to America does happen, then to keep any kind of a lid on inflation, they’ll have to invest heavily on technology and automation…and in AI.

But AI of course involves many moving parts, as will a whole host of new factories, data centres, and all the bits and pieces needed to build out new efficient infrastructure.

I circle back again to this being a great opportunity to add great stocks to your portfolio, or to top up your portfolio if they’re already in there.

However, there’s a lot to choose from right now, A LOT!

Too many to cover in one hit, so today I’m just going to highlight three stocks I think are worth consideration, mainly because they’ve been smashed as hard as anything, they’re all profitable, and they’re all trading at what looks to be a fairly attractive earnings ratio thanks to the recent price declines. They all also pay a dividend, not huge, but better than nothing.

So, let’s take a look (you’re probably already familiar with these as they’re all stocks or industries we’ve written about at length over the years).

Constellation Energy is a leading energy company, primarily engaged in the generation and sale of electricity. They have diverse energy assets, wind, solar, natural gas, hydroelectric assets, but they’re the biggest nuclear owner in America as well.

Energy stocks could be the real winners from Trump’s tariffs and the great reshoring. America needs energy now, but the ramp up in demand from AI, from new factories, data centres, and domestic demand growth could see companies like Constellation surge.

At the close yesterday Constellation Energy’s stock had sunk over 11% for the day to $190.24, marking a hugedecline of 45.95% from its 52-week high of $352.00 from January.

The company’s trailing twelve months (TTM) price-to-earnings (P/E) ratio now stands at 16, which does look like real value for a financially sound company.

In the fourth quarter, Constellation reported earnings per share (EPS) of $2.44, surpassing analysts’ expectations and reflecting a 40% year-over-year growth. The company reaffirmed its 2025 guidance, projecting earnings between $8.90 and $9.60 per share. All of that suggests it’s oversold now.

Considering Constellation’s importance to the rollout of AI it looks tasty at these prices, and I think is definitely one for deep consideration.

Micron Technology is a key player in the semiconductor industry, specializing in memory and storage solutions. I’ve written about Micron before, and their developments in high-bandwidth memory (HBM) are absolutely crucial to the rollout of AI.

Its products, including DRAM and NAND flash memory, are integral components in AI systems, enabling rapid data processing and storage essential for machine learning algorithms. I even had a couple racks of Micron memory (via their consumer brand, Crucial) sitting right next to me in my custom-built PC.

When the market was done with its bleeding yesterday, Micron’s stock closed down a whopping 16% to $74.34. And Micron is now down (a frankly unbelievable) 52.8% from its 52-week high of $157.54 from June last year.

Despite all this, Micron reported strong second-quarter earnings, with adjusted EPS of $1.56 and revenue of $8.05 billion, reflecting a 38% year-over-year increase. The company’s P/E ratio is currently just 17.78, which for a high-tech, AI-focused company that is a critical supplier to the AI rollout, I mean, that’s astounding.

At these prices, with the profits they make and the potential they have as the AI rollout continues over the next decade, this has to be one for deep consideration for a long term investment.

Dell Technologies is a multinational tech providing everything from personal computers to servers, storage devices, and IT solutions.

Its AI server infrastructure is foundational for AI development, and already companies like Elon Musk’s xAI have already looked to Dell to provide them with their AI server needs.

Dell is a long-term survivor of all kinds of market conditions. They’ve been through this (and worse) before and there’s no reason to think they won’t come out of all this for the better again.

Considering their adaptability and continual innovation and development they do now look like great value.

And I say that because when it was all said and done yesterday, Dell’s stock closed at $77.23, down 19% for the day. That also puts it 57% down from its 52-week high of $179.70 in May 2024.

The company’s P/E ratio is now at 12-times earnings, which does look undervalued and oversold. In recent earnings reports, Dell highlighted a $9 billion backlog in AI server orders, underscoring the growing demand for its AI-related infrastructure. And as a supplier to Musk’s companies, and their work with Nvidia on AI factories, Dell has to be in the mix when you’re looking for something to buy.

In short, Constellation Energy, Micron Technology, and Dell Technologies have each experienced a utter whack in the market this week, and stock price falls now put them all for me in a sweet spot of deep, long term value.

However, like I’ve said, this is a market and a US government that is unpredictable at best, and intentionally destructive at worst. That is not a great recipe for just hitting the “Smash buy” button on your portfolio. Balance up the long-term views with short term volatility, risks, capital allocation and your own goals. But if you’re on the hunt for something to buy, I think you’ve got to have these three as first port of call for a closer look.

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Busters & Busters 💰

AI and AI-related stocks moving and shaking up the markets this week. (All performance data below over the rolling week).

***No surprises here, but it’s more bust and busters today***

Bust 📉

• Dell Technologies (NASDAQ:DELL) down 20%
• Western Digital (NASDAQ:WDC) down 18%
• Micron (NASDAQ:MU) down 18%

Bust 📉

• Teradyne (NASDAQ:TER) down 13%
• AMD (NASDAQ:AMD) down 12%
• Meta (NASDAQ:META) down 12%

From the hive mind 🧠

• Should kids use AI for homework? I don’t really have a problem with it. So long as the AI helps in the way that an encyclopedia would, or a book. But giving answers to copy…yeah not so much.
• Oh, AI passed the Turing Test. Yeah, cool…WHATEVER.
• What is this? A datacentre for ANTS? Make it at least three times bigger.

Artificial Polltelligence 🗳️

Weirdest AI image of the day

A New Invention Goes Too Far

ChatGPT’s random quote of the day

Thanks for reading, and don’t forget to leave comments and questions below,

Sam Volkering

Editor-in-Chief

AI Collision