United Rentals a 'natural choice' amid AI construction projects
US equities (^DJI, ^IXIC, ^GSPC) took a hit in Friday's session after President Trump threatened a new 50% tariff against European Union (EU) nations. The indexes ended up closing out the trading week at a loss of over 2% each.
Argent Capital Management Portfolio Manager Jed Ellerbroek comes on Market Domination to discuss his latest stock picks in industrial equipment company United Rentals (URI), Oracle (ORCL), and — ahead of its earnings release on Wednesday, May 28 — Nvidia (NVDA).
To watch more expert insights and analysis on the latest market action, check out more Market Domination here.
Against that backdrop, Jed, as I said, listen, you have to put money to work. You got to find opportunities. I'm interested in reviewing some of those. So let's give people some some investment ideas. One name you like, United rentals, uh, Jed, ticker URI. Why is that one of buy in your opinion?
Yeah. Yeah, we've we've owned United rentals for years and we think it's an outstanding business. The the kind of core reason we like it is because in America and in most other developed countries, the users of construction equipment are gradually, but consistently, um, shifting from owning and maintaining the equipment themselves to renting it instead from the big rental yards like United rentals and Sunbelt. So that is a kind of a steady, consistent boost to demand for United rentals and its industry. And then on top of that, United is just a very well-managed company. They dominate the industry. They've got the most locations. Um, so that means with these big mega projects going on around the United States building semiconductor manufacturing, battery manufacturing, all the airport construction and hospital construction that you see when you when you drive around urban areas, those people want to use one contractor nationwide. And so United is the natural choice for big construction projects like that and the big contractors that serve them. So, uh, good business, consistent demand, and uh, demand is hanging in there pretty well despite what seems like a kind of uncertain economic environment. The company hosted an investor event earlier this week and had mostly positive things to say. So it's a stock that we continue to like and have as a big position in our urgent large cap portfolio.
And then, Jed, um, let's talk about, uh, Big Cap tech and specifically the kind of AI related trade here, right? And is going to be a big event next week when we get earnings from that company. Um, there was a report today that Oracle was dropping what, something like $40 billion according to the FT on, um, on chips for some of the open AI data centers. So it seems like the the spigot is still on. What does that mean for investors?
Yeah, I think, so you're right, earnings next week. We know about the bad news the company will report, you know, the right down to the H20 inventory that was going to be directed toward China. The company's going to take a five and a half billion dollar right off on that. They're going to lose future revenues that would have been tied to those products. So that's the negative that the company's already told us about. I think the the guide for next quarter will be will be decent despite that, which is pretty impressive. And then I think the company's going to speak toward optimism looking further out. And that's mostly tied to what what you mentioned, which is really a new class of customers for those accelerator chips. We're not just talking about, you know, the the hyperscalars, Amazon, Microsoft, Google, buying video chips to put into their cloud computing data centers, but we're talking about enterprise demand for video chips, and we're talking about sovereign AI, which are these foreign countries wanting data centers built in their countries filled with video chips. So, uh, I think that Nvidia still faces a really, really strong demand environment. They are more more supply constrained than they are demand constrained.
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