Steven Cress joins Nicole Benjamin on The Weekly Grade to break down why historical semiconductor data points to a rare market setup amidst unprecedented AI data center spending. Discover the exact factor grades driving a trillion-dollar industry leader ahead of its massive earnings report.
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Nicole Benjamin: Hey everybody. It’s Nicole Benjamin, your host here at Seeking Alpha to bring to you another episode of The Weekly Grade with Steven Cress, and we’re going to be bringing to you market insights in minutes. Now, for today’s episode I’m joined by none other than Steven Cress, VP of Quantitative Strategy here at Seeking Alpha. Thank you so much Steve for joining us today.
Steven Cress: Pleasure to be here. Thank you so much for organizing it as always.
NB: Now, I’m sure you all know who Steven Cress is, but if you don’t, he is the wonderful person behind a lot of the amazing products we have here on-site. Alpha Picks, our PRO Quant Portfolio, our new Quant & Income Growth Portfolio. And so, if that might be of interest to you, go ahead, take a look, and see what that’s all about. Now, Steve, I want to jump right in here and talk about what we’ve got going on, on the screen. The semiconductor index has experienced historic frequency of massive single day gains just over the last few months.
So, with that in mind, this market behavior shows either near tops or bare bottoms. So, how does that quantitative data really just help investors contextualize what’s going on with this extreme volatility amid the AI data center build-out?
SC: No question. There’s a huge data center build-out, and a big benefactor are the semiconductor companies. From a quantitative standpoint, I tend not to really look at the charts that show a top down approach. What I’m really interested in is, how the companies are doing and how they’re projected to do. So, on a Quant basis, when we look at a stock like MU, we want to see what is the value versus the sector, what is the growth versus the sector, what is the profitability for the sector.
There will be a lot of charts that you could look at that are top down charts, and they could be a complete head fake. The industry technology overall, it’s going under a revolutionary change that is basically bigger than what we saw when the Internet came during the tech bubble. And for one thing, many of these companies actually have real revenues and real earnings. And what we try to look at from a Quant perspective is what is real. And that’s what our lens is focused on.
NB: Okay. Well, you also talked about how Micron is an unstoppable Strong Buy for you at the moment. And with these near perfect Quant Scores, and just the upcoming earnings report this week, why is this stock in particular proving to be such a critical structural differentiator, compared to other traditional compute focused chip makers?
SC: Well, what separates Micron, and we could say at one time they were more of a conventional semiconductor company, but they’ve managed to get themselves in the sweet spot in scale. And as a result, to a certain extent, being a legacy chip company, the valuation is actually much cheaper than the rest of the sector. So, when you look at the factor grades on the right hand side, you’ll see a factor grade of B+ and those factor grades are all sector relative, so they provide you with an instant characterization of where the company is versus the sector. So, on a value basis, it’s cheaper than the sector. You could see in terms of growth, it’s an A+ it’s way stronger than the sector.
Profitability is way stronger than the sector at an A+, momentum and revisions as well. So, it’s those core investment characteristics that we like, and it comes down to plain fundamental analysis. Yes, our Quant screens are going through every IT stock in a much larger universe to identify the strong from the weak, but clearly with Micron, MU, we’ve been able to identify that this company is growing faster and has a better valuation framework. So, that’s what leads us to Micron, and really you could see on this slide of all the tech companies that we follow, which is 529, this ranks as the top company in the IT sector, but within semiconductors it ranks number 1 out of 69. And here are some of the numbers behind it.
Revenue growth year-over-year is 86% versus the sector at 11%. The EPS forward growth rate on a long term CAGR basis of three to five years, it’s at 152% versus the sector at 19%, and its net income margins are 580%. So, you could see why we have such a draw to this company. Its size, its scale, its valuation, and its growth is much, much stronger than the sector.
NB: Alright. Now, before we get out of here, Steve, I want to talk about Alpha Picks. And with this portfolio, it continues to outpace what’s going on in the broader market. So, for investors that are trying to navigate those market rotations and any volatility that might come up, what can you say about this product that we have here on platform that tells investors how it’s going to maintain this level of outperformance?
SC: Absolutely. So, to just, by way of background and to give you a little color on it, Alpha Picks is a product that we created about four years ago, and what we do to make our strong ideas accessible is, twice a month we send out our top Quant Strong Buy ideas, and we’ve been doing that for, as I said, about four years now. We have about 40 stocks currently in the portfolio, and I’m pleased to say that Micron was admitted to the portfolio on October 15, 2025, so well before people were really familiar with this stock, we were very early, and the return on Micron is 444% since we added it to the Alpha Picks portfolio.
Now, you could see for the overall portfolio, if you look on the top left hand side, the one year return for Alpha Picks for the entire portfolio is 99% versus the S&P up 24% for the same period. Year-to-date on the far right, you’ll see that the portfolio is up 44.5% versus the S&P up 9.49%. And since inception four years ago on the anniversary, Alpha Picks is up a whopping 428%, compared to the S&P at 97%. And what makes it stand-out is that we identify stocks like Micron, and there are a number of stocks that are up over 100% in addition to Micron, and we have a handful of stocks that are even 1000%.
So, it’s a great product. Of course, not all the stocks win, there are some losers, but as you could tell by the performance and the track record, we’ve done a great job, and Micron is typical of the stocks that we find.
NB: Alright. Well, thank you so much, Steve, for joining us today and for everybody that’s listening in. We’re wrapping up here, but make sure you go and look into Micron. Follow Steve, and also check out Alpha Picks. See if it might be right for your portfolio, and we’ll catch you here next time.
Now, just for some quick housekeeping. Past performance is no guarantee of future results. Content is offered for information purposes only. Unless stated otherwise, any and all individuals participating in the video are third parties that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body. Unless stated otherwise, the views or opinions expressed may not reflect those of Seeking Alpha as a whole.
The accuracy, completeness of content shared cannot be guaranteed. Seeking Alpha does not take account of your objectives or financial situation and does not offer any personalized investment advice. Seeking Alpha is not a licensed securities dealer, broker, US investment adviser, or investment bank. We’ll see you next time.
Read Steven Cress’ Article on Seeking Alpha
Explore Alpha Picks Today!
Sign Up for the new Quant Growth & Income Portfolio!
Past performance is no guarantee of future results. Seeking Alpha does not take account of your objectives or your financial situation and does not offer any personalized investment advice. Content or tools on the platform are offered for information purposes only. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank.
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