VIDEO: Connecting the Dots on Trump's Stargate Announcement Across the Portfolio
Here's how this is a positive development for five holdings and why Meta’s reported move into more hardware products may be another catalyst for this chip position.
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In today’s Daily Rundown video, Chris Versace recaps the moves TheStreet Pro Portfolio made with The Trade Desk TTD shares earlier today, and how quarterly results from United Airlines UAL and Delta Air Lines DAL set up upcoming results from American Express AXP and Mastercard MA.
Chris follows that up by discussing how and why the Stargate AI announcement by President Trump yesterday is a positive development for the portfolio’s shares of Nvidia NVDA and Marvell MRVL, but three other holdings as well. As Chris points out, it pays to connect the dots when assessing an announcement like this one.
Closing out today’s video, Chris touches on reports Meta META is poised to build on its Ray-Ban smart glasses with other hardware products. He shares when we’re likely to hear more about this potential effort and which chip company in the portfolio stands to benefit.
Transcript
CHRIS VERSACE: Hey everyone, Chris Versace here. Wednesday, January 22. And, yes, the market is continuing to climb higher, as is the pro portfolio. We had a busy morning. We issued several alerts to you, one where we boosted our price target on Trade Desk shares and upped our rating on them to a one from two. That action, of course, came after we digested the better-than-expected quarter end guidance from Netflix.
Remember, the company saw pronounced growth in its advertising subscription tier and shared a goal of doubling its ad revenue in 2025. To us, that's just another confirmation point about the accelerating shift in advertising away from radio, print, and traditional TV towards connected TV, a sweet spot for Trade Desk.
We followed up with a second alert in which we said we would scoop up more shares of Trade Desk for the portfolio given the upside to our revised target, and, of course, in keeping with our newly established one rating. In another alert to you, we discussed how the results and outlook from United Airlines, mixed with similar comments recently from Delta Airlines, sets up extremely positive quarterly results on the travel side for American Express and MasterCard.
In that alert, we also made the point that while we're thinking about the stronger outlook for air travel, well, the reality is that when you travel, odds are you're staying somewhere, whether it's a hotel, AirBnb, or what have you, and you're eating. So there's an arguable multiplier effect on spending as we see airline travel remain robust. So with that, our view is it sets up a very nice earnings report from American Express later this week and from MasterCard next week.
But I have to say that MasterCard shares have been a good performer for the portfolio. And American Express shares have been performing nicely as well since we added them to the portfolio not too long ago. We continue to see upside for both. And, of course, based on what we learned from their respective earnings reports, we'll adjust our price targets as needed.
Now I wanted to turn and do a deeper dive, if you will, on the big announcement we heard last night from President Trump about Stargate and the roughly $500 billion in spending that will occur on AI and data centers over the next several years. And if you missed it, Stargate appears to be a joint venture between the likes of Oracle, OpenAI, and SoftBank. We'll see if there are any others in the mix as we get more information.
But the reality is that this JV is simply going to be the latest group, if you will, to throw its hat into the AI data center spending ring. Who's it joining? Well, it's the known players. Microsoft, Google, Amazon, Meta, and others. And as we think about this in the rising capacity, it adds to our thinking that we are still in the very early innings when it comes to AI adoption, but it also confirms our view that, without question, we are in an AI arms race when it comes to spending.
Now in situations like this, in this case, we do happen to own some of those big spenders because of the benefits to their business. But generally speaking, when we see an arms race like this, we do want to own key suppliers. When it comes to AI and data center, that means chips. And when we think about that, well, it all makes us feel pretty good about the positions we have in Nvidia and Marvell.
Remember, some of the recent data points that we got from Taiwan Semiconductor about their high-performance computing business were very robust. The outlook they issued was robust. All of this kind of comes together and really reaffirms our positive, longer-term view on the shares of Nvidia and Marvell. Now, next week, some of those big tech companies, including ones that we have in the portfolio, will report. That means we'll be updating our expectations for their capital spending.
And if we see that trending higher, well, that'll be another positive catalyst for our shares of Nvidia and Marvell. And, of course, as we digest that spending prospects along with Stargate, we will start to revisit our price targets for Nvidia and Marvell along the way. On the heels of the Stargate announcement, we're also seeing some nice movement in our energy pain point play, which you know as Eaton Corp.
Just think about it. More data centers, more power needed, pretty much plain and simple. As we traverse the earnings season, we will be looking for capital spending comments from electric utilities, like Dominion Power, Oncor, TXU, CenterPoint and Nextera Energy, and others over the coming weeks. And as we get a better sense as to what the capital spending outlook is for these electric utilities, not just for 2025, but 2026, 2027, we will revisit our Eaton price target as required.
And let's also not forget all this talk about Stargate and building data centers, that is construction activity. And it means that there's going to be incremental construction activity on the non-residential infrastructure front. That, of course, is a big tailwind for United Reynolds, and Vulcan Materials, which we, of course, own in the bullpen. Reflecting on it, I was just thinking about what President Trump pointed out last night during the press conference.
He said, quote, "These are going to be big, beautiful buildings." And as we think about our conversation just now, starting off with Stargate, but ending with United Reynolds, Vulcan Materials, it is a reminder that, generally speaking, as investors, we need to connect the dots, but especially so when we see big, high-profile announcements like this one.
Finally, we're also reading that Meta might be making some more moves into hardware, building on the success of its smart glass effort that it has with Ray-Ban. So what we are hearing is Oakley's name is kind of being bandied about for another effort into the smart glass arena, but we're also seeing indications that Meta is working on even other hardware products-- watches, earbuds.
The reality is that, look, these are interesting efforts, but we are going to need to see and feel the products that will help us of understand them, assess their adoption potential. And, of course, that ties into whether or not they actually move the revenue and profit needle at Meta. But to the extent that Meta does move into these areas of connected devices, something that would fall under IoT, it could be another positive for a particular chip company that is already found in Meta's Ray-Ban smart glasses.
I'm talking about our shares of Qualcomm. Now if we had to speculate about what Meta is doing, we would say that its annual developer conference, better known as Connect, is the likely event from which we'll see any formal announcements. I have to say, though, that Connect tends to happen September, October. At least that's where it's been traditionally.
We'll want to keep our eyes open for eventual dates for that event and what it could mean, but we will be keeping our ears open when Meta reports its quarterly results next week to see how Mark Zuckerberg and the team talk about reality labs and these efforts that are likely to be spinouts from that particular business.
Oh, before I forget, we do have office hours today in the forum, 4:00 PM to 5:00 PM Eastern Standard Time. You bring your questions, I'll bring the answers. So I hope to see you there. But please remember, check your emails, your alerts. We want to make sure you're getting our latest thoughts when it comes to the portfolio. And, yes, we will be having more thoughts coming your way very soon. Thanks for watching.
At the time of publication, TheStreet Pro Portfolio was long TTD, AXP, MA, NVDA, MRVL and META.
