As the landscape of investing evolves, classic companies that have successfully reinvented themselves are emerging as strong contenders in the artificial intelligence-driven data center buildout. With significant gains in stocks like Nvidia and AMD over the past few years, other companies further along the data center supply chain are beginning to gain traction this year. Investor Tim Seymour, chief investment officer of Seymour Asset Management and manager of the Amplify CWP International Enhanced Dividend Income ETF, has identified three traditional companies that could be valuable additions to modern portfolios.
The first company on Seymour’s list is Cisco, a name synonymous with the dot-com bubble, which has seen an 18% increase in its stock price this year. “There’s no question that bigger networks, ethernet-based networks are again a part of the data center trade,” Seymour stated in an exclusive CNBC PRO video. He elaborated, “Your father’s Cisco was a networking company that obviously saw — let’s just say — some level of that business got compromised as the world changed. They are the dominant, I think, enterprise server player.”
What makes Cisco particularly exciting is its transformation over the last five years into a software company, now generating over 50% of its revenue from recurring streams in security software. “I think the combination here in the new world order puts Cisco quietly in a great spot,” Seymour remarked. He also referred to Cisco as “the cheapest mega cap tech stock that most people aren’t even focused on,” noting that it trades at 17 times next year’s earnings estimates—almost half of Nvidia’s valuation, according to FactSet data.
The second company Seymour highlighted is Caterpillar, founded in 1925. He noted, “It’s fascinating because there are different pieces of the AI trade.” He emphasized that not only tech companies will benefit from AI; big industrial firms are also poised for transformation. “Caterpillar is very intimately involved in the whole data center buildup,” he added, pointing out its direct exposure to data centers through its backup generator business.
Finally, Seymour mentioned Siemens, a German multinational that is also on his radar. For more insights into his views on these companies, be sure to check out the video above.
Disclosure: Seymour is long Siemens in the IDVO and long Cisco in multiple portfolios.
