Drew Pettit, the chief investment strategist at Roundhill Investments, suggests that Big Tech stocks remain attractive due to frequent upward earnings revisions. In a Ticker Take podcast appearance, he highlighted eight companies that he believes the market is still underestimating.
The PEG Ratio and the 'Revisions' Thesis
Drew Pettit argues that traditional price-to-earnings (P/E) ratois are misleading when earnings are climbing rapidly. He favors the PEG ratio, which compares a stock's price to its growth. According to the Ticker Take podcast, this metric suggests the Magnificent Seven and other large-cap tech stocks are actually more affordable than many small-cap stocks because their growth trajectories are far superior.
This approach reflects a broader shift in how institutional investors view the AI era. Rather than looking at static valuations,the focus has moved to the velocity of profit growth. If analysts continue to underestimate quarterly results, the stocks effectively become cheaper even as their prices rise.
From Meta's Muse AI to Alphabet's Gemini 4
Meta Platforms (META) and Alphabet (GOOGL) are prime examples of the "revisions" trend. For Meta Platforms, Pettit notes that estimates for 2027 and 2028 have increased by 10 to 20 per cent since the start of the year, bolstered by the launch of the Muse AI model. Over 90 per cent of the 79 analysts covering Meta Platforms recommend buying the stock.
Similarly, Alphabet (GOOGL) has seen a surge in analyst confidence following the release of Gemini 4. As reported in the source, roughly 90 per cent of the 71 analysts tracking Alphabet recommend a buy, suggesting that Wall Street is still adjusting its long-term profit expectations for the search giant.
Micron's Margins and CrowdStrike's AI Defense
The hardware and security sectors are also seeing a shift in sentiment. Micron Technology (MU) is benefiting from the massive computing power required for AI, with over 90 per cent of its 62 analysts recommending a buy. Pettit suggests that Micron Technology's margins may be more stable than in previous boom-and-bust memory cycles.
In the software space, CrowdStrike (CRWD) stands out as an exception to the fear that AI will disrupt traditional SaaS. With nearly 75 per cent of its 62 analysts recommending a buy, CrowdStrike is positioned to profit from the increased need to defend the vast amounts of data generated by AI agents.
Snowflake's Low Correlation and Kirby's 'HALO' Assets
Diversification within the tech portfolio is key, and Pettit points to Snowflake (SNOW) as a strategic pick. With just under 90 per cent of its 57 analysts recommending a buy, Snowflake is valued for its low correlation to semiconductors and the broader market, providing a buffer against a sector-wide crash.
The most unconventional pick is Kirby (KEX), a company that moves oil and chemicals by water. pettit classifies Kirby as a "HALO" (hard asset, low obsolescence) business. Because Kirby operates in the physical world, it serves as a hedge against the possibility that AI might disrupt purely digital business models.
What Happens if Earnings Revisions Stall?
The primary risk to this bullish outlook is the possibility that analyst revisions stop moving upward. If the profit growth of companies like Lumentum (LITE)—which currently has nearly 90 per cent of its 35 analysts recommending a buy—plateaus , the valuation argument collapses quickly.
Additionally, there are questions regarding the depth of coverage for some picks. While Samsung Electronics has 44 analysts in total agreement on a buy, Kirby (KEX) is only covered by seven analysts. This raises the question of whether the "HALO" thesis is widely accepted or merely a niche observation by a small group of specialists.
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