January 24, 2025

 

(PRESIDENT TRUMP IS PRIORITIZING AI)

 

January 24, 2025

 

Hello everyone

 

President Trump is prioritizing the push forward of AI.

Which companies are likely to benefit?

Think of (ORCL) Oracle, (MSFT) Microsoft, and (ANET) Arista Networks

Earlier this week, a $500 billion joint venture was announced between OpenAI Oracle, and Softbank, which aims to strengthen artificial intelligence infrastructure in the U.S.

Shares of Oracle and Microsoft have rallied nearly 15% and 3%, respectively, since the start of the week.  Microsoft is an investor in OpenAI.

Solita Marcelli from UBS notes that the project requires more computing and electricity, which may point to greater investments in grid infrastructure and power transmission.

Kash Rangan, a Goldman Sachs analyst, believes Oracle and Microsoft are prime winners from the government’s prioritization of AI.

Rangan notes that Microsoft is in a prime position to benefit from this project as the company has a strong balance sheet and capital expenditure for 2025.  Oracle, however, may take longer to benefit, but the tailwind will certainly gather strength in the years to come.  Analysts are seeing the probability of more capital AI investments for Oracle, which could boost its cloud infrastructure revenues at a compounded annual growth rate exceeding 50% through 2027.

The Stargate venture also sees Arista Networks as a potential big winner too.  The company has exposure to Oracle, Microsoft, and OpenAI, as well as the strength of its ethernet switching portfolio.  Piper Sandler’s James Fish argues that “given switching represents >50% of networking spends, and Arista’s? 30% share of high-end datacentre switching, we see this as a +$6B [serviceable addressable market] over 5 years.”

Fish also points to (PSTG) Pure Storage, as an “underappreciated way” to invest behind Stargate to meet storage capacity, estimating a $10 billion total addressable market.

(I recommended Oracle, Microsoft, and Arista Networks on January 6, 2024.

Oracle was at $104, Microsoft was at $372, and Arista Networks was at $248.00. Arista Networks had a stock split on December 4, 2024, which took it back to $62.00. 

TRADE ALERT

(TPB) TURNING POINT BRANDS

 

 

Turning Point Brands manufactures, markets, and distributes branded consumer products.  The company operates through three segments: Zig-Zag Products, Stoker’s Products, and Creative Distribution Solutions.  Zig-Zag Products segment markets and distributes rolling papers, tubes, finished cigars, make-your-own cigar wraps, and related products as well as lighters and other accessories under the Zig-Zag brand.  The Stoker’s Products segment manufactures and markets moist snuff tobacco and loose-lead chewing tobacco products under the Stocker’s, Beech-Nut, Durango, Trophy, and Wind River brands.  Its Creative Distribution Solutions segment markets and distributes other products without tobacco and/or nicotine to individual consumers through the VaporFi B2C online platform, as well as non-traditional retail through Vapor Beast.  In addition, it markets and distributes cannabis accessories and tobacco products.  The company sells its products to wholesale distributors and retail merchandising, drug stores, and non-traditional retail channels.  The company was formerly known as North Atlantic Holding Company Inc. It changed its name to Turning Point Brands Inc in November 2015.  The company was founded in 1988 and is headquartered in Louisville, Kentucky.

A shareholder return of 138% over the last 12 months is not too shabby for this company.  Most analysts rate it a strong buy or a buy and see it rising more than 20%.  Earnings are forecast to grow by 14.04% per year.  Earnings grew by 294.6% over the last year.

 

Recommendation:  Scale into the stock. And/or you could try a bull call spread like a 60/65 with an April 17 expiration, or a 60/65 with a July expiration.

So, your trade would look like this:

Buy 1 TPB 60 call

Sell 1 TPB 65 call

When I was looking at these trades the limit price for the April expiration was $1.48 and the limit price for the July expiration was $1.95.

Prices will be all over the place by the time you receive this, so purchase at best.

 

QI CORNER

 

 

SOMETHING TO THINK ABOUT

 

 

 

Cheers

Jacquie