Value Pick of the Week

International Business Machines (IBM) — We all know IBM, but what you may not know is that IBM is coming off a 32.9% dip that began in early February, the result of fears that Anthropic’s Claude AI would cut into IBM’s consulting segment — the one that revolves around updating ancient COBOL code, some of which has been around since the 1960’s.

  • The entire company was punished for a perceived threat to one segment.
  • Q1 2026 earnings on April 22 beat expectations — revenue grew 9% and EPS beat the estimate by 5.5% — but the stock fell another 6–7% as investors focused on decelerating growth in the high-margin software segment and IBM’s refusal to raise full-year guidance.
  • This past week IBM hit a rare trifecta:
    • Began recovering from a substantial dip
    • Moved more than 10% in one week (+16.0%)
    • High volume exceeding three standard deviations above average
    • The immediate catalyst was a $1 billion CHIPS Act award matched by a $1 billion cash commitment from IBM, aiming to accelerate fault-tolerant quantum computing by 2029 — positioning IBM as the U.S. government’s designated partner for quantum chip manufacturing.

Anyone who has spent three minutes talking with me about technology knows that I’m convinced quantum computing is going to be the true revolution in AI. What’s being called AI today is mostly hype. When fault-tolerant, generalized quantum computing arrives, it’s going to change everything. And by that, I mean everything. IBM Chart

Market Summary

The S&P 500 gained 0.9% in another turbulent week, extending its winning streak to eight consecutive weeks.

  • Treasury Yields Spike — Bonds rose above psychologically significant levels, with the 30-year Treasury briefly touching its highest level since 2007. The S&P 500 fell 0.7% the same day.
  • Nvidia (NVDA) Earnings — The largest company in the world reported Q1 FY2027 results on Wednesday:
    • Revenue was up 85% year over year, EPS beat expectations,
    • An $80 billion share repurchase authorization was announced (very shareholder friendly)
    • The quarterly dividend was raised 25x — from $0.01 to $0.25 per share
    • For their efforts, NVDA was rewarded with a 4.4% decline for the week. This has happened before. NVDA’s results did, however, translate into good news for other AI-related companies, which helped our portfolio.
  • New Fed Chair — Kevin Warsh was sworn in as the new Federal Reserve Chair on Friday, replacing Jerome “Too Late” Powell.
  • Middle East — Peace remains elusive, but reports that the U.S. and Iran were getting closer to a deal lifted markets mid-week and oil dropped below $100 a barrel.

How Our Picks Fared

Our past picks gained 2.7% for the week versus the S&P 500’s 0.9%. Four of our past picks rose by more than 10%.

📈 Ford Motor Company (F) rose 11.4%

  • Ford Energy signed a five-year framework deal to supply EDF Power Solutions North America with grid-scale battery storage starting in 2028, repositioning Ford as an energy infrastructure player beyond traditional auto manufacturing. Reminds me of Tesla (TSLA).
  • Ford’s Q1 2026 adjusted EPS of $0.66 far exceeded the $0.19 consensus estimate and the company raised its full-year adjusted earnings guidance.
  • Ford leaned into AI at its Dearborn Truck Plant during the week, with simulators enabling ten times more tests in one-tenth the time.

📈 CrowdStrike Holdings (CRWD) rose 11.7%

  • Cantor Fitzgerald, KeyBanc, and Wells Fargo all lifted their price targets to $700 (from $525–$550), citing strong customer channel checks on CrowdStrike’s new Mythos AI-security product and its growing role as a one-stop cybersecurity platform for large enterprises.
  • Analysts highlighted that 57% of channel partners were running ahead of plan versus 32% last quarter, and that the sales pipeline rose 49% year over year — signals investors interpreted as evidence that demand is accelerating into earnings.
  • CrowdStrike announced a partnership with SVA, one of Germany’s largest IT integrators, to push its Falcon platform deeper into German government and corporate accounts.
  • Anthropic’s Project Glasswing initiative continued to cast a spotlight on cybersecurity stocks broadly, benefiting CrowdStrike alongside peers like Palo Alto Networks and Cloudflare.

📈 Zscaler (ZS) rose 13.2%

  • The move was largely driven by pre-earnings positioning ahead of Zscaler’s fiscal Q3 2026 results scheduled for May 26 after market close. The company raised its full-year Annual Recurring Revenue guidance to $3.73–$3.745 billion, implying 24% growth, up from its prior 23% forecast.
  • Zscaler announced its intention to acquire Symmetry Systems, whose access graph maps how human and non-human identities, applications, and data connect across the enterprise.
  • The same Glasswing/AI-security narrative lifting CRWD provided a broader cybersecurity tailwind for ZS as well.

📈 Williams-Sonoma (WSM) rose 14.1%

  • Williams-Sonoma reported Q1 fiscal 2026 results that topped analyst expectations on both the top and bottom lines, with net revenues up 4.4% year over year.
  • Free cash flow margin expanded to 5.5%, up from 3.5% in the same quarter last year, and same-store sales rose 4.8% year over year, accelerating from 3.4% in the prior year period.
  • The company returned $373 million to shareholders through buybacks and dividends during the quarter, demonstrating financial strength and confidence in the business outlook.
  • The broader market provided little assistance on earnings day — the S&P 500 was up just 0.1% — underscoring that WSM’s move was almost entirely earnings-driven.

Remember the fallen this Memorial Day, and have a great week!

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