Order backlogs are a central theme this earnings season, and AI and data center companies with increasing order backlogs are expected to continue to prosper. Super Micro Computer (SMCI) and GE Vernova (GEV) made it clear that Wall Street remains obsessed with order backlogs.
Super Micro Computer got investors excited when it announced on July 21 that its order backlog exceeded $60 billion. For context, this number is almost three times SMCI’s sales for 2025.
The other thing that got investors excited was SMCI’s announcement that it expects its operating margins to be between 15% and 17%, significantly above its previous forecast of 8.2% to 8.4%. Naturally, expanding operating margins often result in big earnings surprises, and earnings surprises drive stock prices
Meanwhile, GE Vernova posted a 2.8% revenue surprise and a 20.3% earnings miss in its report on July 22.
Despite the miss, the big news was that its order backlog rose 32.2% to $24.2 billion in the second quarter, up from $18.3 billion in the first quarter. In the past year, the company’s order backlog has risen 88% to a whopping $176 billion.
Again, for context,this is nearly five times sales for 2025. As a result, GE Vernova raised its full-year revenue guidance above analyst estimates to $45.5 billion to $46.5 billion.
Related: Super Micro’s 20% surge reveals what AI investors want
Another company to watch out for is Bloom Energy (BE), which is expected to post revenue growth of 102.7% and earnings growth of 294.1%, according to the analyst community.
Bloom Energy has an order backlog of $20 billion, approximately 10 times its 2025 sales.
The order backlog for AI data centers is not expected to be completed for at least three years. As a result, the AI data center boom is expected to continue through 2029, with some of that growth appearing in the results reported this quarter.
Where the best earnings will be
Energy-related stocks are forecasted to post the strongest earnings, followed by information technology and semiconductors, then material stocks. These three (of 11) S&P 500 sectors are forecasted to post stronger second-quarter earnings vs. the S&P 500, so we remain in a narrow market.
Here are some stocks I recommended in each of these three sectors:
Energy:
- Okeanis Eco Tankers (ECO)
- International Seaways (INSW)
- Teekay Tankers (TNK)
- HF Sinclair (DINO)
- Phillips 66 (PSX)
- Cenovus Energy (CVE)
- Suncor Energy (SU)
Information Technology (including data center-related and semiconductor stocks):
- Nvidia (NVDA)
- Advanced Micro Devices (AMD)
- Micron Technology (MU)
- Seagate Technology (STX)
- Palantir Technologies (PLTR)
- AppLovin (APP)
- Bloom Energy (BE)
- GE Vernova (GEV)
- Comfort Systems USA (FIX)
- Quanta Services (PWR)
- Ciena (CIEN)
Materials:
- Carpenter Technology (CRS)
- Howmet Aerospace (HWM)
The current economic and market environment is the best since 1999, and it would be a shame if investors missed out on the best stock market environment in almost three decades. I expect the incredible earnings market we are now enjoying to persist for months, given the forecasted sales and earnings growth for fundamentally superior stocks.
