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Happy Thursday afternoon to everyone on The Street. Here's a snapshot of where markets ended the trading session, plus tomorrow's trade idea delivered to you today.

• 🟨 | US stocks were mixed on Thursday. The Dow initially surged to a new high during the day, finally settling at a 244-point gain or 0.6%. The S&P 500 remained flat, and the Nasdaq shed 0.2%.

• 📈 | One Notable Gainer: Shares rose 32% as Affirm's revenue outlook for the fiscal first quarter, projected between $640 million and $670 million, exceeded analysts' $625 million estimate. customers.

• 📉 | One Notable Decliner: Dollar General's shares dropped nearly 32% after it cut its sales and profit forecast, citing weaker sales due to financially strained core

• 🤖 | Tomorrow's Trade: A Different Kind of AI Play. Scroll down for more.

Plus, make investing easy with Betterment.

MARKET MOVERS

Best Buy, Nutanix, Crowdstrike

BBY (+14%) Best Buy beats earnings estimates as its sales decline stabilizes (Yahoo News)

NTNX (+20%) Nutanix Beats Q4 Earnings and Revenue Estimates (Zachs)

CRWD (+3%) CrowdStrike stock retains Outperform rating as BMO sees less impact from recent outage (Investing.com)

OKTA (-18%) Okta’s stock tumbles after earnings beat is offset by mixed guidance (MarketWatch)

BIRK (-16%) Birkenstock misses quarterly profit estimates as expansion plan hits margins (Reuters)

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OVERHEARD ON THE STREET

CNBC: Ford will stop its LGBTQ survey participation and minority quotas amid rising conservative pressure on DEI policies.

BioSpace: Merck will halt two late-stage studies of its PD-1 inhibitor Keytruda in lung and skin cancer due to disappointing results.

Reuters: Amazon workers to join Teamsters' strikes against unfair labor practices in US.

Axios: Yelp is suing Google, claiming the tech giant unfairly favored its own products to monopolize local search and advertising markets.

Reuters: HSBC's Wealth and Personal Banking chief, Nuno Matos, is leaving amid leadership changes before Georges Elhedery becomes CEO.

TOMORROW’S TRADE IDEA, TODAY

A Different Kind of AI Play

Outside the Box

The obvious AI play might be at its ceiling. NVIDIA stock suffered from its latest earnings report — despite posting a top- and bottom-line beat. When you’re king of the hill, even “great” isn’t good enough anymore.

But that doesn’t necessarily mean the AI wave is at an end. Rather, it may just be time for investors to think outside the box.

Enter Vertiv Holdings (VRT). This company produces infrastructure that helps cool and power the data centers necessary to run AI-powered tools. Its Q2 sales were up 13% and earnings were up around 50%. But much like NVIDIA, Vertiv’s stock price dropped sharply, despite impressive numbers that far exceeded expectations. Why?

Raising Expectations

The drop may have had more to do with investors' fears over massive AI spending by tech giants like Amazon (AMZN) and Microsoft (MSFT) than it did Vertiv itself. If demand shifts, the overspending could pose a tail risk for the broader sector.

However, analysts like JPMorgan’s Stephen Tusa maintain Vertiv’s fundamentals are strong enough to make it more than just an AI play. On top of sales and earnings beats, Vertiv saw its profit margins increase last quarter, as both product prices and systems sold surged higher. 

Management raised its guidance for full-year 2024 sales by $50 million to nearly $7.7 billion, but analysts think even that is being conservative, if margins continue to grow. 

According to Tyler Walling of Otter Creek Advisors, the market for data center cooling products should hit $30 billion by the end of this year. That would be double-digit growth year-over-year — and it is expected to continue to grow at a similar clip for at least the next 8 years. 

Price vs. Growth

Despite all the promising signs, the stock may still be reasonably priced, thanks to the recent selloff. Vertiv is currently trading at around 25.8 times 12-month forward earnings, well below its 32.8 multiple from late July. 

To put that in perspective, direct competitor Eaton (ETN) is trading at the same multiple as Vertiv — while Vertiv has twice the expected growth. 

To hear Tusa tell it, Vertiv is a rare opportunity: a stock with “best-in-class” upside at a bargain bin price.

TOGETHER WITH BETTERMENT

Ease into investing

Ease being the key word. With automated tool like portfolio rebalancing and dividend reinvestment, Betterment makes investing easy for you, and a total grind for your money.

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ON OUR RADAR

Axios: Disapproval of labor unions is at its lowest since 1967, reflecting a resurgence in union activity and increased public support.

The Verge: OpenAI and Anthropic will allow the US government to review new AI models before their release to enhance safety.

WSJ: BNPL operator Zip is in talks with Apple to integrate its payment product in the U.S. and plans to announce new merchant partnerships this quarter.

CNBC: Google's Imagen 3 will soon let Gemini users create AI photos of people, with limits on identifiable individuals, minors, and explicit content.

BI: A Kroger executive admitted to raising prices amid FTC opposition to the company's $24.6 billion merger with Albertsons.

YESTERDAY’S POLL RESULTS

Are you bullish or bearish on Bank of America (BAC) over the next 12 months?

🟩🟩🟩🟩🟩🟩 🐂 Bullish

🟨🟨🟨🟨⬜️⬜️ 🐻 Bearish