Stifel is flagging that firms building AI infrastructure continue to be limited by supply-side dynamics heading into the June and July earnings reporting period. The investment bank expects the majority of companies within its coverage universe to sustain a pattern of beating consensus estimates and issuing stronger guidance.
The Philadelphia semiconductor index - the SOX - declined by roughly 8% in the first week of July. Stifel attributes that move to several factors: reports of Meta entering the cloud market, headlines around high-bandwidth memory supply and a repricing of rate expectations toward a more hawkish Federal Reserve. Despite the pullback, the firm characterizes the move as a valuation correction within an otherwise intact cycle rather than as a signal of deteriorating demand.
Stifel points to growing backlog levels, the extension of long-term agreements and mounting capacity commitments as evidence that the supply-constrained environment is persisting across compute, optical and electronics manufacturing services sectors. The firm also highlighted an instance where Samsung's record preliminary second-quarter results were taken negatively by the market, noting that results perceived as in-line or marginally above expectations risk being treated as shortfalls by investors.
On the processor front, Stifel identifies NASDAQ:NVDA as its preferred large-cap holding into the June and July earnings season. The firm anticipates continuing strength from Blackwell and expects initial orders for Vera Rubin to carry into NVIDIA's third fiscal quarter. Stifel notes that NVDA is trading at approximately 25 times fiscal 2028 estimates.
Advanced Micro Devices, NASDAQ:AMD, is another preferred name for accelerated compute in Stifel's view. The firm cites AMD's EPYC server-CPU franchise and reports a total addressable market that Stifel sizes at more than $120 billion by 2030, which it says implies a compound annual growth rate in excess of 35 percent. Stifel also observes that AMD has secured two 6GW commitments for its MI450 and Helios products from OpenAI and Meta. The firm's note points to AMD's July 23 "Advancing AI" event as a potential near-term catalyst.
Within optical components, Stifel shifted a near-term preference to NYSE:LITE over NASDAQ:COHR. The note states both companies currently trade at roughly 29 times calendar 2027 consensus earnings per share. Stifel describes LITE as the primary merchant EML supplier into a supply-demand imbalance that management estimates at about 30 percent and widening, positioning the company to benefit from constrained optical supply.
For supply chain and contract manufacturers, Stifel highlights NYSE:CLS, NYSE:JBL and NASDAQ:TTMI. The firm says CLS trades at about 23 times fiscal year 2 estimates and that management reports awarded backlog as the strongest in the company’s history. JBL has raised its fiscal 2026 AI-related revenue outlook to about $13.6 billion, up from roughly $9 billion last year, and trades in a 19 to 20 times range on fiscal year 2 estimates. TTMI has retraced around 30 percent from its June peak yet still printed a 1.41 times book-to-bill ratio and carries a backlog of $787 million, which is up 52 percent year-over-year.
On the equipment and test side, Stifel lists NASDAQ:CIEN and NASDAQ:VIAV. CIEN sizes its addressable market at roughly $50 billion by 2029 across WAN, data-center interconnect and scale-across layers, and the firm notes CIEN's backlog is at a record $7.7 billion.
Contextual takeaways
Overall, Stifel's view centers on supply constraints continuing to drive revenue and backlog growth for AI infrastructure suppliers, with the earnings season likely to show companies beating estimates and, in many cases, lifting guidance. The firm views the recent index volatility as valuation-driven rather than demand-driven, while cautioning that even strong results can be read negatively by the market if they fall short of elevated expectations.