No Value Pick of the Week this week.

Market Summary

The S&P 500 rose 1.4% for the week, closing at a record high on Friday — its ninth consecutive weekly gain, the longest winning streak since 2023.

  • Retail earnings were the week’s primary driver — Walmart (WMT), Target (TGT), Home Depot (HD), and Lowe’s (LOW) all reported during the week, and the results collectively delivered a positive surprise. All four retailers reported stronger-than-expected earnings and most delivered optimistic outlooks for the rest of 2026, even with inflation expected to remain elevated.

  • The U.S. consumer defied pessimists — Target said spending growth was widespread across all income brackets, while Walmart confirmed American consumer spending remains mostly healthy — a meaningful reassurance given ongoing inflation concerns.

  • FOMC (The Fed) minutes were less hawkish than feared — the release of the final minutes from Jerome Powell’s last Fed meeting showed committee members were cautious rather than aggressive, which calmed some of the rate hike anxiety that had been building since the hot CPI report the prior week.

  • Market breadth continued to improve — the rally showed signs of widening beyond mega-cap tech, with smaller company stocks and emerging markets beginning to participate more meaningfully, a healthy sign for the index’s sustainability.

Before we look at how our past picks did, we need to look at what happened with Dell Technologies (DELL), because the results were so remarkable that they pulled the rest of the sector up with it. Descriptions of their quarterly report included words like “remarkable,” “staggering,” and “truly exceptional.”

  • Quarterly revenue soared nearly 88% year over year (YoY).
  • EPS came in at $4.86, beating expectations of $2.94 — YoY earnings growth of 214%.
  • Dell reported a record $51.3 billion AI-related backlog, meaning future revenue already committed by customers.

The broader significance is what Dell’s numbers confirmed about the AI buildout. Dell’s customers include CoreWeave (CRWV), Honeywell (HON), and Samsung — meaning AI infrastructure spending isn’t just hyperscalers building for themselves, it’s enterprises broadly deploying AI at scale. When a hardware company shows 757% growth in AI server sales and has $51 billion in backlog, it validates every other company in the AI infrastructure supply chain simultaneously. That’s why the ripple effects were so wide — Dell essentially provided independent confirmation that the AI capex supercycle is real, large, and accelerating, which lifted virtually every company that touches AI infrastructure in any meaningful way.

How Our Picks Fared

Our past picks lost some ground to the benchmark this week, trailing the S&P 500 by 1.1%. We’re still up by a respectable 17.7% overall.

📉 Zscaler (ZS) fell 23.4%

  • Beat on every headline metric — adjusted EPS (+6.9%), revenue (+1.8%), record non-GAAP operating margin of 23% — yet the stock collapsed anyway after gaining 13.2% the prior week.
  • The damage came from two guidance disclosures: Zscaler cut its full-year free cash flow margin guidance nearly 4% due to surging costs for memory, storage, and processors, and pulled forward data center equipment purchases to lock in prices before further cost increases — which seems like smart business decisions by management.
  • FY27 ARR growth was guided at only 16–17% year-over-year, falling short of estimates.
  • The company lost two sales leaders, and the CFO cited a “prudent approach” to guidance amid the leadership transitions.

📉 AutoZone (AZO) fell 13.8%

  • Revenue missed expectations by 0.44% — yet the market reacted harshly.
  • EPS beat estimates by 5.3% and domestic same-store sales grew a healthy 4.1%.
  • Management attributed weak overall revenue growth to softness in international markets, particularly Mexico and Brazil.
  • For context, this is a stock that barely moves — it had only 3 moves greater than 5% in the past year prior to this, making the 13.8% drop a significant overreaction by historical standards.

📈 CrowdStrike (CRWD) rose 10.2%

  • Pre-earnings momentum and sentiment continuation following its 11.7% gain the week before.
  • The intensifying U.S.-Iran conflict strengthened the cyber threat environment, and Morgan Stanley noted in a pre-earnings report that security budgets are not the line item CFOs are cutting — and CrowdStrike is the direct beneficiary of that reality.
  • CRWD announced a collaboration with insurers Coalition, Liberty Mutual, and Lockton to help organizations quantify and mitigate cyber risk, broadening its ecosystem.

📈 CDW Corporation (CDW) rose ~13.2%

  • Almost entirely a Dell halo effect story — CDW’s own Q1 earnings on May 6th were solid but unremarkable.
  • Dell’s blowout AI server revenue means every one of those deployments needs IT solutions that CDW is ideally positioned to provide.
  • CDW’s CEO had specifically noted in their own earnings call that as customers move from AI exploration into real production environments, they increasingly rely on partners with integration, governance, and lifecycle expertise — exactly what CDW offers.

📈 Ford Motor (F) rose ~16.8%

  • The bigger story this week was Ford Energy: the stock’s rise in May is largely due to Ford’s new Ford Energy segment, which leverages its EV infrastructure to sell battery energy storage systems starting in 2027, with a $2 billion investment targeting AI data center power demand.
  • Ford reached a 3-year high this week as investors began revaluing the company on the back of its new energy business.
  • The stock gained 7 consecutive days and is increasingly being compared to energy infrastructure plays rather than a traditional automaker.

📈 International Business Machines (IBM) rose ~17.3%

  • The primary driver was momentum carried over from the May 21st CHIPS Act quantum computing announcement.
  • The framing of IBM as a strategic national asset resonated with a new class of buyers — defense-adjacent and infrastructure-focused funds that don’t typically hold IBM.
  • The Dell blowout earnings on May 28th provided a final burst of energy, directly validating IBM’s hybrid cloud and AI consulting positioning.
  • Underlying fundamentals supported the move — 58% gross margins, ~18% EBIT margins, and ROE above 30% meant buyers felt comfortable chasing the stock higher.

📈 Oracle (ORCL) rose ~17.5%

  • Management raised its revenue guidance for fiscal year 2027 and reiterated strong targets for fiscal year 2026, reflecting robust demand for Oracle’s AI infrastructure and cloud offerings.
  • Oracle Cloud Infrastructure (OCI) continued gaining recognition as the preferred AI cloud for companies seeking an alternative to the hyperscalers — with skyrocketing bookings from OpenAI, Meta, and xAI, positioning it squarely at the center of the booming AI ecosystem.
  • The Dell earnings halo effect lifted the entire enterprise tech infrastructure space, and Oracle benefited as one of the core software and database layers underlying large-scale AI deployments.

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