A sharp market rotation away from major technology stocks has created potential opportunities in leading artificial intelligence companies, according to one portfolio manager.
BNN Bloomberg spoke with Jed Ellerbroek, portfolio manager at Argent Capital Management, about why Nvidia, Broadcom and Microsoft remain attractive as demand for AI computing power continues to surge.
Key Takeaways
- A recent rotation out of large technology stocks follows a period when semiconductor companies strongly outperformed software firms.
- Demand for computing power tied to artificial intelligence remains extremely strong, according to commentary from the Morgan Stanley technology conference.
- Major cloud companies are collectively spending hundreds of billions of dollars annually building AI data centres to support growing workloads.
- Investors are increasingly looking across the broader AI ecosystem, including chip designers and cloud platforms, rather than focusing only on the most crowded trades.
- Upcoming industry catalysts, including Nvidia’s GTC conference and new capital spending guidance from major cloud companies, could shape the next phase of AI investment.
Read the full transcript below:
ANDREW: Let’s zero in on some big tech stocks. We’ve heard a lot about a rotation out of these names, and the Magnificent Seven stocks as a group are down about six per cent this year. But our guest has some ideas in what he calls companies with outstanding earnings and a bright outlook. Nvidia is his top selection.
We’re joined by Jed Ellerbroek, portfolio manager at Argent Capital Management. Thank you very much indeed for joining us, Jed.
JED: Hey, good morning.
ANDREW: Could we start off with Nvidia? You think this one is a buy?
JED: Yeah, yeah, sure do. I thought Nvidia’s earnings were outstanding last week. Couldn’t ask for more. The stock did not respond very positively to that news, and the stock has underperformed, you know, really for six or seven months now. I think the valuation is attractive. I think the company’s growth prospects are really strong.
Morgan Stanley had their big tech conference out in San Francisco last week, and I think the biggest takeaway for me from that event was just the overwhelming demand for computing power. Nvidia, of course, is the primary supplier of that today. And so I think the demand outlook, you know, looking out a couple of years, is really, really strong. And I think Nvidia’s stock is not priced for that strength.
ANDREW: Isn’t there a risk, though, that we’ll see cancellations of some of these big data centres? People will have too much debt, for example, and that could cast a shadow over the sector?
JED: There’s no doubt that their customers are spending really aggressively to buy as many Nvidia systems as they can. The Amazons of the world, Meta, Microsoft, Google and Oracle — they’re all spending pretty much all of their operating cash flow to build new data centres here in 2026. That aggregate spending amounts to about $600 billion or thereabouts.
Just this morning, Applied Materials, which is a semiconductor capital equipment business, spoke at a conference, and they said they think that $600 billion number in 2026 is going to go to $700 billion in 2027. That growth, you know, that’s a high-teens growth rate.
Those customers — those four or five big capex spenders that I listed earlier — their cash flows are growing about 15, 20, 25 per cent a year. So that $600 billion this year going to $700 billion next year seems reasonable to me. That is above where consensus estimates for capital expenditures sit today. And so I think that’s why you see really all of those stocks I listed up here this morning.
ANDREW: Broadcom — another device maker you like the look of. Just remind us, where do they fit into the data centre build-out?
JED: Yeah, sure. Broadcom helps a lot of these big capex spenders I listed make their own semiconductor chips. They’re not as good as Nvidia’s. They’re not as powerful. They also don’t consume as much energy, and they’re cheaper to purchase.
The big capex spenders — the big data centre operators — Amazon, Microsoft, Meta and Google — they want Nvidia’s super-powerful, top-of-the-line chips, but they also want a lesser version to handle the least demanding tasks.
So Broadcom really is piggybacking on top of this growth in accelerated computing capacity and the big capex spending plans of those big data centre builders. So I’m really participating in the growth alongside Nvidia. I don’t think of them as true competitors. I think they’re more — you know — everybody’s growing, everybody’s participating in that growth. It’s not so much what’s good for Nvidia is bad for Broadcom or vice versa.
ANDREW: Right. So they enable companies to build their own devices and kind of get out of the grip of Nvidia to some extent — they don’t just go to that company.
JED: Yeah, diversification and balance. It’s not really an acceptable situation for Microsoft and Meta and Google to be so exceptionally dependent on one key supplier — Nvidia in this case. They need other options, and the best second option is partnering with a Broadcom or Marvell to design their own less powerful chips.
ANDREW: We’re awaiting the latest capex forecast for Microsoft. That’s your final idea. What draws you to Microsoft right now?
JED: Yeah, Microsoft stock has been beaten up because of this software selloff that’s been going on over the last six months. I think investors have been shooting first and asking questions later with regard to virtually all software stocks over the last six months.
Microsoft has been caught up in that even though, yes, Microsoft offers a whole lot of software to customers, but they also have a really large cloud computing business and other businesses in their corporate umbrella.
So I think Microsoft is an attractively valued stock today. I think their competitive position, both in software and cloud computing, is very strong. So we think the stock is an attractive candidate for purchase here today.
Just one more mention — maybe Oracle reports earnings tonight. They are going to give us a view on capex spending as well. They recently upgraded their capital expenditure forecast from $35 billion to $50 billion. We might get another update to that here this evening.
ANDREW: People are a bit worried about Oracle though, aren’t they — the debt load and whether they could be overdoing it?
JED: Yeah. What’s unique about Oracle — I mentioned that most of these companies are spending all of their operating cash flows to build data centres. Oracle’s gone beyond that. They’re spending more than all of their annual cash flows.
They have a fairly high debt load — about four times EBITDA — and so they’re the most leveraged, the most aggressively financed of these data centre builders. Investors are skeptical of that and concerned about it. There’s so much about AI that’s unprecedented and unknown. When you stack leverage on top of that, investors are worried.
ANDREW: And sorry — would you be a buyer of Oracle right now?
JED: We own a small position of Oracle in our Argent Dividend Select strategy, but it’s a small position for us.
ANDREW: Thank you very much, Jed. I really appreciate it. Jed Ellerbroek, portfolio manager at Argent Capital Management.
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| NVDA NASDAQ | Y | N | Y |
| AVGO NASDAQ | Y | N | Y |
| MSFT NASDAQ | Y | N | Y |
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This BNN Bloomberg summary and transcript of the March 10, 2026 interview with Jed Ellerbroek are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.