This Dip Won’t Last – 8 Stocks I’m Bagging!

Back in June, in just a matter of days, the chip index fell about 10%. The nuclear stocks that had tripled gave back 30%, and the quantum names got cut nearly in half. And it looked like the AI trade was finally breaking. Then Micron had its quarterly earnings, where it reported revenue up 346% from a year ago, its best gross margins ever near 85%, and its most advanced AI memory already sold out through 2026, with the shortage running all the way into 2028. Those are clear signs that the AI buildout is actually speeding up, not a bubble beginning to cool down. So these are the top stocks that I'm watching right now. The best companies in that whole buildout that got dragged down with everything else, and now have the most room to grow. And at the very end, I'm going to show you exactly how I'm going to size each one. But before we jump in, if you're getting any value from my videos or my research, please consider pressing the like button, and I'd love it if you'd consider subscribing. And if you're interested in my trading activity, my portfolio, and any of my deeper analysis, then hey, I'd love for you to join our community on Patreon. Instead of starting with chips, like I normally would, instead I'm going to start with electricity, where it all begins. And the first name is Eaton, the power management company that builds almost everything an electron passes through on its way from the grid to the server. The switchgear, the transformers, and the backup power that keeps data centers alive. And here's the number that completely reframes this whole company. Eaton's electrical content runs about 3.4 million dollars for every megawatt of AI compute that gets built. And the industry is on track to build roughly 13.6 gigawatts of new data centers this year alone. So that's about 46 billion dollars of electrical equipment up for grabs from a single year of construction. And Eaton's entire company did about 27 billion in revenue just last year. So in just one year of data center buildout, it opens up a market bigger than the whole business was last year. And this is already showing up because Eaton's data center orders grew about 240% over the past year. And it's carrying the better part of a year of sales in backlogs. Then there's the part that looks alarming until you look a little bit closer. Last quarter, the headline operating margin dropped to about 15%, which looks like the business is beginning to crack. But that was the cost of the acquisitions Eaton was closing. Underneath it, the core electrical business ran a 22.7% margin with record adjusted earnings and raised guidance. Then you need to go ahead and take a step back because the transformation happens to be the real story. Six years ago, Eaton was a 13% margin industrial doing about 21 billion in revenue. And today it does over 27 billion at nearly 20%. So even as the top line grew, the wider margin almost doubled its profit. It truly earns a premium for that now. And a pullback like the one that we just got is the window to start building the position. Now staying with power, the second name is BWX Technologies. And this is the one nuclear stock that I would actually buy on this pullback because it is the only profitable one in the group and the sole manufacturer of the reactors that run on every US Navy submarine and the aircraft carrier. So when nuclear sold off this spring, the gap showed up real fast because the hyped pure plays like Oklo and NuScale, well, they came down about 30%, while BWXT gave back only roughly 17% and from a base that had been climbing while they had fallen. And the reason is simple. BWXT already builds reactors and they get paid for it while the other pure plays are still years away from their first one. BWXT is actually building and the others are still betting they're not quite there. But right now the Navy is just the foundation because BWXT quietly runs four different nuclear businesses all under one roof. They're building the first reactor pressure vessel, the single largest piece for one of the first small modular reactors going up in North America. It also makes the Treso fuel for Kairos Power, the company building a reactor to help power Google. And its medical arm produces isotopes for cancer treatment from Therisphere for liver tumors to Actinium-225, one of the most promising targeted cancer isotopes that are being made today. So it's true, you are buying a defense monopoly, a piece of the nuclear renaissance and an AI power supplier and a cancer treatment business all in one. And their work is book solid because BWXT carries a record $8.6 billion in backlog. That's up 77% in a single year against a company that does under $4 billion in revenue. So it has more than two years of work already locked in and you can see it flowing through to cash because free cash flow went from about $46 million in 2023 to nearly $300 million in 2025. And it's guided higher again this year. The only real catch is the price because it's near 43 times forward earnings on a low double-digit grower. So the quality is not the question, the entry is. So a pullback like the ones we've been seeing the past few months is really how we get better entry options. Now if you're anything like me, you're spending a lot of time trying to figure out which names deserve a spot in your portfolio for the back half of the year. And that's where today's sponsor, Seeking Alpha, comes into play. Where Seeking Alpha happens to have a platform that I use to pressure test almost every stock that I research. Their quant rating system grades thousands of stocks on value, growth, profitability, momentum, and earnings revisions. And that back-tested quant strategy has beaten the S&P 500 every year for over a decade. I genuinely lean on them for their earnings call transcripts, the top-rated screens, and the quant grade before I even begin to build a position. And here's exactly why I'm bringing this up right now. On Tuesday, July 14th, from noon to 1.30 Eastern, Seeking Alpha's Steven Kress is hosting a live top stocks event for the second half of 2026. These happen to be his quant-backed picks built for growth and long-term performance. This one is members-only for premium, alpha picks, and pro. And right after it wraps up, Steve's full list of second-half picks are going to drop as a members-only report. So if you want to see it at that event and the report that follows, then join through the link down in the description. And now we move on to chips, starting with the name that everyone expects, and that's NVIDIA. And the real monopoly that gets overlooked is from software, not the chips. Everything in AI is written on NVIDIA's platform called CUDA, with around 6 million developers building on it and over a billion of its chips already out in the world. And that lock-in is what no competitor can really break. But what makes it a monopoly in several fields at once is that NVIDIA runs the same playbook pretty much everywhere. In the data center, it doesn't sell a chip. It sells the entire rack as one computer. And its networking arm alone tripled in the past year to nearly a $60 billion pace. And in robotics, it builds the platform the humanoid robots are trained in and run on every day. And in quantum, it makes the software those machines run on too, with 17 of the top quantum hardware makers and 9 national labs already plugging into NVIDIA. So whoever wins AI or whoever wins robots or whoever wins quantum, they all still pay NVIDIA. Then there's a number that completely stops me in my tracks. Because over 3 years, revenue went up 8 times, from $27 billion to over $215 billion. And the stock actually got cheaper as it climbed, its price-to-earnings ratio falling from over 100 to about 30. Because earnings grew faster than the price. And that's also why the PEG ratio, which measures the price that you pay against how fast earnings are growing, sits near a 0.5. And anything around a 1 or lower tells you the stock is cheap for its growth. So after this pullback, oversold on its 200-day line, that is exactly where I want to own the company that the whole AI economy runs on. Next up is the other side of the trade with Broadcom. Because NVIDIA is the company that everyone pays. Strangely enough, Broadcom is the one that they call when they want to stop paying it. When Google, Meta, OpenAI, or Anthropic wants to build its own AI chip to get out from under NVIDIA, it co-designs that chip with Broadcom. And Broadcom also sells the networking that wires those chips together. So it gets paid twice on the very same cluster. And that AI business is accelerating, not slowing, because its AI revenue grew more than 140% just last quarter. And it is on pace to nearly triple this year, with management guiding it to nearly double again the year after. All backed by a $73 billion order book. Which is why that one line is now nearly half the entire company. And the VMware deal everyone thought would weigh down the company, it did the complete opposite. Because VMware's software runs at a richer margin than Broadcom's own chips. Around 77% against a 58%. So it actually lifted the blended margin instead of dragging it down. So even though Broadcom looks expensive at around 60 times earnings, that is the VMware accounting hiding the real number. Because on next year's earnings, it trades closer to 24 times, with a peg of about a 0.5. And that's just as cheap as its growth as NVIDIA. So after the pullbacks we've been seeing back down on its 200-day line, that is my entry into the arms dealer of the whole AI chip war. And that now brings us to the cheapest and most beaten down of the megas, Alphabet. Designing its own chips, called TPUs, so it isn't paying the NVIDIA tax the rest of the industry already pays. And it's building its own Gemini models on top of everything else. The thing to understand about Alphabet is that it's really four businesses moving at very different speeds. The cash cow is Search, still by far the biggest piece, and far from dying, its growth has nearly doubled over the past year, climbing from 10% to 19%. As AI mode crossed a billion users and began monetizing questions it never could before. The new rocket is Google Cloud, where revenue grew 63% and the operating margin roughly doubled in about a year and a half, from the high teens to 33%. So a unit that used to lose money is now a serious profit engine. And customers have already signed for around $460 billion dollars worth of future cloud work, a backlog bigger than all of Alphabet's revenue in a year. And quietly, underneath all of them, YouTube has grown bigger than Netflix and become the most watched service on American televisions. And Waymo won't let us ride along as a free call option, already running more than 400,000 paid robo-taxi rides a week. That's about 10 times what it was just two years ago. So once again, it's four engines, and the fastest, highest margin ones are taking a bigger slice every single quarter. Now there is one thing to flag, and that's that last quarter's profit looked bigger than it truly was. It was inflated by a one-time paper gain on an investment. So strip that out and the real earnings are just a little bit lower. Even then, it is the cheapest mega in the group, around 24 times forward earnings with a peg near 1.3. And it's the most oversold name here in the pack after we've seen those pullbacks the past few weeks. Granted, it's slowly building up momentum, but it still has a long ways to go. And this is where I like to see it. Now another of the mega anchors is Arista Networks, the company that builds the high-speed switches that wire all those GPUs together inside an AI data center. And like Broadcom and Google, its real edge is software, because every Arista switch from a campus closet to a giant AI spine runs the same single operating system, which is why the cloud giants standardize on it. For years, the standard way to connect GPUs was NVIDIA's proprietary InfiniBand, and now the whole industry is moving that job onto OpenEthernet, which is Arista's home turf. Meta proved it works by running a cluster of more than 24,000 GPUs on Arista Ethernet, and matching InfiniBand. And that is why Arista's AI networking revenue doubled last year, and is guided to more than double again this year. And a lot of that demand is already paid for, because customers prepay Arista ahead of delivery. And that deferred revenue has roughly doubled to more than $6 billion just sitting there on the books. Underneath it is a fortress, because over six years revenue nearly quadrupled, while the operating margin actually widened from 30% to 43%, with zero debt and more than $12 billion of net cash. Its gross margin looked like it slipped during the year from 65% to 62%, but for the full year it came in dead flat at 64%. The same as the year before, because when low margin cloud orders ship heavy, the blend dips, by design. The only real catch is the price, because near 44x forward earnings, its peg sits close to a 2. That happens to be the richest in this group. And the market made that point when Arista beat and raised guidance, and the stock still fell. So, of all the megas, this is the one where price matters just a little bit more. Which is exactly why I'm looking for more pullbacks, because I want it around that 50-day line where buyers tend to step back in. Now we're going to shift and drop down into the small caps, where both the risk and the reward step up quite a bit. And we're going to start with Rambus, the shovel seller of the memory world. Every high-speed memory module going into an AI server needs a small set of traffic control chips, and Rambus makes the whole set, led by the conductor chip called the RCD, in what is basically a three-company club. So it gets paid on the memory in the AI buildout, no matter which manufacturer is going to win. And the business underneath is completely transformed, because a decade ago, Rambus was a money-losing patent licensing shell. And today, it's a debt-free, profitable chip company whose operating margins swung from a negative 38% to a positive 37%. There's also a twist that runs opposite to what you would expect, because Rambus gets paid on the not on the price of the memory. So when memory goes into shortage and prices spike, which is fantastic news for Micron, well, fewer modules actually ship. And Rambus can feel that as a headwind. And that is part of why this is the highest risk name on the list. Right now, it trades near 60 times its earnings, with a peg well above a two. And it's working through a few overhangs all at once. It is responding to a document request in a Justice Department investigation, where it is not charged and it's not a defendant. A securities inquiry that, so far, is just a law firm fishing for plaintiffs rather than a filed lawsuit. And a chief financial officer who left earlier this year. Though the company says there was absolutely no disagreement. So this is a small, high-risk position, sized down on purpose, and only worth it on a real pullback like the ones that we've been slowly getting here and there. Now, on the optical side of the buildout, there's Fabrinet, the purest picks and shovels play in the whole basket. Because Fabrinet is the factory that physically builds the optical parts that move data through AI networks. The transceivers that connect the GPUs and the switches inside a data center. It builds them for Cisco, NVIDIA, Coherent, and Lumentum. So it wins no matter whose brand is on the box. And customers cannot easily leave, because aligning lasers and fibers to within a fraction of a human hair takes a lot of years to qualify. And once a program is certified in Fabrinet's clean rooms, moving it is slow and risky. To me, I think the demand is the real story. Because its data center interconnect business grew 90% in the past year. And what is really holding it back isn't the orders, it's capacity. Since demand is running far ahead of what it can physically build. Which is exactly why it's racing to build a giant new plant. Now, this is a thin margin business by nature, because the customer owns the designs. So don't look at the 12% gross margin and expect a heck of a lot more. The quality shows up elsewhere. Because revenue more than doubled over six years, while operating margin climbed from under 8% to nearly 10%. And it earns about 20% on its capital with no debt. Catch is that it's small and it's concentrated. With NVIDIA and Cisco together, about half of its sales. And even after a 30% pullback, it's not exactly cheap. At a peg of around a 1.5. So this is the small, higher risk end of the optical trade, sized accordingly. And a pullback like the ones we've seen makes the entry work a little bit easier. So if I'm going to be putting my money into these today, here's how I'd balance out my basket. It's going to be heavy on the mega caps, scaling down through to the small caps. And that's exactly how I run my own portfolio. And it's built to be asymmetrical. So the small And if they don't, well, they don't drag the whole thing down. Well, there you have it. I hope that you learned something new today. And as always, thanks so much for watching.