Tiernan Ray

Congrats to Andrew Feldman and team at Cerebras as the stock opens its first day of trading. A fine outcome for a decade of hard work. Stock has opened almost double the offer price of $185 offer, and gone as high as $386.34. I would estimate a future market capitalization of $121 billion based on a 12.8 multiple of sales if the company can somehow put together $9 billion in revenue next year from OpenAI. That’s a big if, of course. But that could yield a price of $563, I estimate. Cerebras opens at $350: Price target $563 or bust Shares of chip maker and AI hosting provider Cerebras Systems on Thursday opened for trading at almost double the offer price of $185. If Cerebras can actually get billions in revenue from main customer OpenAI, and if they get a stock multiple comparable to that of CoreWeave or even Nvidia, that could yield a stock price of $563, well north of the IPO. There are a lot of ifs in there, and the whole thing could still come crashing down. thetechnologyletter.com solana:4yEjcMiy6GAgrpWpUvhUXfaP1vQmJXfqJjEyxBSZpump

Sometimes the hyperbole gets the better of us. Jensen’s furious pace on the conference call is vintage Jensen, but also a little over-heated and at times confusing. The results speak for themselves, however. The company’s business continues to be stellar. Nvidia’s slightly bizarre conference call doesn’t diminish the stock’s tremendous value Nvidia CEO Jensen Huang’s extended disquisition about the re-classification of revenue was a strange false note on the Wednesday conference call. But, no matter. Even without any multiple expansion — and Nvidia stock is dirt cheap at twelve times sales and twenty-two times earnings — the shares will appreciate simply because of the awesome growth. Oh, and bigger dividends and buybacks will draw more income investors. thetechnologyletter.com $NVDA

Sometimes the hyperbole gets the better of us. Jensen’s furious pace on the conference call is vintage Jensen, but also a little over-heated and at times confusing. The results speak for themselves, however. The company’s business continues to be stellar. Nvidia’s slightly bizarre conference call doesn’t diminish the stock’s tremendous value Nvidia CEO Jensen Huang’s extended disquisition about the re-classification of revenue was a strange false note on the Wednesday conference call. But, no matter. Even without any multiple expansion — and Nvidia stock is dirt cheap at twelve times sales and twenty-two times earnings — the shares will appreciate simply because of the awesome growth. Oh, and bigger dividends and buybacks will draw more income investors. thetechnologyletter.com $NVDA

The threat of rising rates notwithstanding, the trends continue to be favorable for the most established tech companies linked to the AI trade, including Analog Devices and Keysight, and some stocks that have come to be value stocks such as Nvidia. Here are some thoughts ahead of their earnings this week. Nvidia, Analog Devices, Keysight dominate by stability They are not the most flashy names in AI these days, but Nvidia, Analog Devices and Keysight have much to recommend them, both this earnings week and in general. Also, CoreWeave and Nebius are set to “taking a breather,” and Zscaler can withstand competition. TL is $1 a week for the first four weeks — the most economical way to stay up to date on the day’s tech-stock developments, every day of the week. thetechnologyletter.com $NVDA $ADI $KEYS

Cerebras: Price target $563 or bust Congrats to Andrew Feldman and team at Cerebras as the stock heads to the open of the first day of trading. A fine outcome for a decade of hard work. Stock has been indicated to open way above the $185 offer, perhaps $400 or more. I would estimate a market capitalization of $121 billion based on a 12.8 multiple of sales if the company can somehow put together $9 billion in revenue next year from OpenAI. That’s a big if, of course. But that could yield a price of $563, I estimate. @cerebras solana:4yEjcMiy6GAgrpWpUvhUXfaP1vQmJXfqJjEyxBSZpump

Please enjoy my interview with Dynatrace CEO Rick McConnell. Dynatrace CEO: Pursuing large deals with AI giants Dynatrace CEO Rick McConnell says his company is working on deals with the largest AI companies. That’s not a promise, but there seems a reasonable chance they can ink some kind of very large commitment down the road. If and when that happens, it could be a “catalyst” for shares currently trading at a rock-bottom valuation. thetechnologyletter.com $DT

Cisco surges but the 1999 comparisons are a bit too much Cisco’s AI inflection is real, and price targets are zooming to $150, as much as 25% upside from here. But there’s a little bit too much enthusiasm for a return to 1999 that is expecting too much. People are excited to go back to a time when Cher’s “Believe” was topping the charts, and when it seemed that the Internet boom would last forever. Then, Cisco’s networking business was having a unique moment, where Internet Protocol and ethernet were replacing token ring, etc. We are not in that time, and this is not the rebirth of Cisco Systems. thetechnologyletter.com $CSCO $ANET

This week and last week tend to be the busiest for tech corporate earnings season because they’re filled with smaller, mid-sized companies, many of which you may not have heard of. We had 164 companies of note reporting last week and another 63 that I follow this week. It’s both exhausting and exhilarating to keep up with this stuff on a daily basis. The table of winners and losers is a labor of love for me. Dynatrace falls, Nebius surges Software maker Dynatrace did just fine but is having its individual growth “metrics” picked apart, and Nebius, Tower Semi, and Nextpower are stars of the Tuesday-Wednesday earnings rush. thetechnologyletter.com $NXT $DT $NBIS $TSEM $D

I started reporting on technology thirty-two years ago. A brilliant guy named Dick Shaffer gave me my first break. Dick is a visionary and pioneer. He had been a prominent WSJ columnist and then he went out on his own and founded a newsletter, ComputerLetter, and a conference business. Dick was very early in writing about Silicon Valley on a regular basis, long before every household started putting their 401Ks into tech stocks. He was amazingly plugged into all the venture capitalists that mattered at Sequoia and Accel and Kleiner Perkins. It was a great job. We wrote very in-depth pieces for the newsletter that incorporated both technical detail and the broader picture on business. And the tone of the newsletter was perfect thanks to the fine editing of Jack Wilson up in Larkspur. I think it is still one of the finest periodicals on technology that there has ever been. A lot of the articles were prescient, such as a 1997 piece talking about the IPO of Ciena and the advent of “DWDM” that anticipated the fiber optics gold rush during the DotCom boom. When I report on things today, in the blog I named in honor of CL, The Technology Letter, I see a lot of things I saw decades ago, just dressed up in new clothing. As it says in the Old Testament, מה–שהיה הוא שיהיה ומה–שנעשה הוא שיעשה ואין כל–הדש תחת השמש. What has been will be, what has been done will be done, and there is nothing new under the sun.

Every bit of progress on Intel’s part is good news, of course, and one hopes for a return to greatness. But with years of damage to the microprocessor business, I don’t see the latest rumors as indicative of a turnaround, even if the momentum trade keeps going. Hope springs eternal for Intel to get some big customer deals for its foundry business, but it’s already all reflected in the rocketing share price, says one analyst. There are many better bets in chip-land than this. Intel’s foundry business still doesn’t look very interesting thetechnologyletter.com $INTC $AAPL $TSM

Everyone is constantly looking for the next hidden gem in the AI data center craze. And every company seems to have something that could be big… someday. Looking for a long shot in AI data centers? How about Ams-Osram? Shares of LED-chip maker ams-Osram got a lift Monday from an upgrade pegged to a potential AI data center laser business. Although the stock is very cheap, this seems like a real long shot relative to other AI bets such as Lumentum. thetechnologyletter.com $AMS $AMSSY

Gary Smith, CEO of Ciena, is one of the longest-running CEOs in the tech world. I’ve been talking to him for years. He’s always a thoughtful interviewee, now with many years of observing the market under his belt. I remain skeptical about the magnitude of spending on AI and whether it can ultimately be funded. Gary is optimistic, noting that networking equipment he is selling actually carries live traffic. That, he argues, suggests real money is being made off of AI. Ciena CEO: The network is the bottleneck to AI For twenty-five years, Gary Smith has steered Ciena as the last remaining specialist vendor in fiber optics. As the AI boom drives raging demand for networking between GPUs, Ciena is hitting its stride financially, with growth and profit not seen in decades. Can the good times keep going? thetechnologyletter.com $CIEN

The TL20 is a selectively weighted group of the best tech stocks, so that large moves in a single name can move the group up or down by a lot. Today’s 17% gain in Lumentum is an example, helping the TL20 to cross 499% in total gain since inception in July of 2022. thetechnologyletter.com $LITE

I’m optimistic about this latest turn we’ve seen in software stocks. It’s still very early in the deployment of artificial intelligence in enterprises. That may provide a nice runway for programs in DevOps and the like to help rein in what promises to be an absolute mess implementing AI “agents.” The TL Podcast for May 11th: The week software came back Software seems to be finally coming back into favor, lead by the recent reports of Datadog, DigitalOcean, Twilio, and Jfrog. These companies’ results suggest some software makers will not only survive the automatic code created by Anthropic’s Claude Code, they will even thrive by helping with all the problems AI has in production. thetechnologyletter.com $DDOG $DT $DOCN $GTLB $FROG $INOD $TWLO

@_theofilos @DivesTech Thank you for reading!

@TiernanRayTech "I love @DivesTech for the 'Big Picture' view but when it comes to the specific tech architecture and the small-cap Fixers that actually move the needle @TiernanRayTech knocks it out of the park. And to think Tiernan does it with a FRACTION of Dan's his budget? David vs. Goliath

Dan Ives and I are kindred spirits in our affection for tech, although he’s a smarter dresser than I am. The TL20 has a few years on the IVES ETF, though Dan has about a billion dollars on me. I love the competition between our respective tech picking. Good luck to us both, Dan. @DivesTech $IVES

We are, again, witnessing waves of the AI trade as investors grope for the next opportunity that isn’t already a crowded trade. Even as semiconductors continue to do well, pockets of software are becoming validated as AI beneficiaries rather than AI victims. Such is the case with the near-doubling today of Innodata, a company I have interviewed many times over the past three years. Innodata soars amidst software’s resurgence The software names that are now associated with the struggle to make AI work are seeing amazing gains, such as the 93% surge in Innodata and the 20% jump in shares of Akamai. Many areas continue to struggle including commerce-related plays such as The Trade Desk. thetechnologyletter.com $INOD $AKAM $DOCN $DDOG $DT $TWLO

We’ve seen waves in which different parts of tech light up as they are favored with a portion of the enormous spending on artificial intelligence. This morning’s report feels like something of an inflection for “DevOps” and “observability.” Datadog soars as AI-driven outlook the best in years Software maker Datadog just blew away expectations in a way it hasn’t in years. Some may be the result of stepped-up spending from those free-spending AI customers, OpenAI and Anthropic. But CEO Olivier Pomel indicated there is rising deployment of AI among many of his customers, not just the giants. Shares of competitor Dynatrace are rising in sympathy. thetechnologyletter.com $DDOG $DT

Honestly, the CPU mania over agentic AI is becoming a crowded market, with two x86 giants, AMD and Intel, now facing direct competition from ARM, and major competition from Nvidia Grace and Vera, and another very viable edge contender, Qualcomm, waiting in the wings. I’m more interested in how this pie may be split into an increasing number of slices as the pie keeps growing. Pick AMD over Intel in the CPU battle AMD shares are surging just like Intel’s did two weeks ago, and I think I like AMD’s prospects better. Plus, DigitalOcean’s attractive economics, Lumentum’s rising profitability, and Onto Innovation and Astera Labs’s expanding opportunities. thetechnologyletter.com $AMD $INTC $ARM $NVDA $QCOM $LITE $ALAB $SHOP $DOCN

Human, not AI, stock picking Through Tuesday morning, the TL20 group of stocks to consider is up 453% since inception in July of 2022. The AI trade continues to be very good to several components of the TL20, especially Micron Technology. The TL20 is now up 42% since the start of the year. This is not AI-generated investing, this is human experience in stock picking and an ability to see what is working in the market. thetechnologyletter.com $MU