Q2 2026
Q2 2026 IPS Stock Picks — Quarterly Update
- Run date:
- April 1, 2026
- Model:
- IPS
- Universe:
- Core Production Universe
- Benchmark:
- SPY adjusted total return
- Horizon:
- 12-month SPY-relative outperformance probability
Elite Compounder Stream
Q2 2026 IPS Elite Compounder Stock Picks
The Q2 update keeps the same Elite / Strong Compounder Alpha framework, but the ranking reflects updated financials, revisions, valuation caps, AI capex intensity, and relative-strength conditions entering the second quarter. The list remains tilted toward AI infrastructure, cloud platforms, enterprise software, and high-quality consumer compounders. Largest positive updates came from AVGO, NVDA, ORCL, ANET, and COST. The largest tactical caution remains valuation: many top-quality names are still capped by Valuation Compression Risk, Crowded Quality, or Capex Intensity.
1.AVGO — Broadcom
Positive Alpha Candidate- Category
- Strong Compounder / AI Infrastructure
- Structural
- 86 / 100
- Tactical
- 66%
- Key Theme
- Custom AI silicon, networking, and infrastructure software
Broadcom remains the top-ranked Q2 compounder candidate. Fiscal Q1 2026 results strengthened revisions and regime-fit inputs: revenue rose 29% YoY to $19.31B, adjusted EBITDA reached $13.13B (68% of revenue), and non-GAAP EPS was $2.05.
IPS view: AVGO remains one of the best blends of AI infrastructure exposure and durable software cash flow, but the model does not allow the score to move materially higher because expectations are already elevated. Structural Score +1 vs Q1.
2.NVDA — NVIDIA
Positive Alpha Candidate- Category
- Elite Compounder / AI Infrastructure Leader
- Structural
- 91 / 100
- Tactical
- 66%
- Key Theme
- AI accelerators and data-center compute
NVIDIA remains the highest structural-quality AI compounder. Fiscal Q4 2026 revenue was $68.1B (+73% YoY), Data Center revenue $62.3B (+75% YoY), and full-year revenue reached $215.9B (+65%).
IPS view: NVDA remains a premier compounder, but IPS treats it as a high-quality alpha candidate rather than a near-certain winner. Crowding, export risk, and scale keep Tactical Probability capped at 66%.
3.GOOG — Alphabet
Positive Alpha Candidate- Category
- Elite Compounder / AI and Cloud Platform
- Structural
- 87 / 100
- Tactical
- 63%
- Key Theme
- Search cash flow plus AI cloud acceleration
Q4 2025 improved the AI/cloud side of the thesis. Google Cloud revenue rose 48% to $17.7B, led by Google Cloud Platform, AI infrastructure, and enterprise demand.
IPS view: GOOG remains one of the cleaner mega-cap AI compounders, combining AI optionality with durable cash flow and less extreme valuation pressure than the most crowded AI hardware names. Capex intensity and antitrust risk remain the main caps.
4.MSFT — Microsoft
Positive Alpha Candidate- Category
- Elite Compounder / AI and Cloud Platform
- Structural
- 88 / 100
- Tactical
- 62%
- Key Theme
- Azure, Microsoft Cloud, and enterprise AI
Fiscal Q2 2026: revenue $81.3B (+17%), operating income $38.3B (+21%), and Microsoft Cloud revenue $51.5B (+26%).
IPS view: MSFT remains a high-confidence compounder, but the model does not rank it above more direct AI infrastructure names because its AI upside is broader, slower-moving, and more capex-intensive.
5.ORCL — Oracle
Positive Alpha Candidate- Category
- Strong Compounder / AI Cloud Capacity
- Structural
- 80 / 100
- Tactical
- 61%
- Key Theme
- OCI backlog and AI infrastructure contracts
Oracle moves ahead of META this quarter on a stronger AI backlog signal. Fiscal Q3 2026 RPO reached $553B (+325% YoY, +$29B QoQ). Most AI-contract equipment needs were funded via customer prepayments or supplied by customers, reducing financing concerns.
IPS view: ORCL is a hybrid compounder/regime candidate. Not as structurally elite as MSFT or GOOG, but its Q2 setup is stronger tactically because OCI demand and RPO visibility improved.
6.META — Meta Platforms
Positive Alpha Candidate- Category
- Strong Compounder / AI Advertising Platform
- Structural
- 82 / 100
- Tactical
- 60%
- Key Theme
- AI advertising, engagement, and monetization
Q4 2025 revenue rose to $59.89B (+24% YoY) with operating income of $24.75B. Q4 capex hit $22.14B and full-year 2025 capex was $72.22B, keeping the Capex Intensity flag active.
IPS view: META still has a powerful AI advertising setup, but Q2 risk is more balanced: operating momentum is strong while AI infrastructure spending is increasingly material. Tactical Probability -1 vs Q1.
7.ANET — Arista Networks
Neutral / Quality Watchlist- Category
- Strong Compounder / AI Networking
- Structural
- 79 / 100
- Tactical
- 59%
- Key Theme
- Data-center Ethernet and cloud networking
Fiscal 2025 revenue of $9.006B (+28.6%), GAAP gross margin 64.1%, non-GAAP gross margin 64.6%.
IPS view: ANET is a high-quality AI networking watchlist name. Close to Positive Alpha status, but IPS requires either stronger relative strength or a clearer upward revision cycle to move it above 60%. Structural Score +1 vs Q1.
8.AMZN — Amazon
Neutral / Quality Watchlist- Category
- Strong Compounder / Cloud + Retail Margin Recovery
- Structural
- 80 / 100
- Tactical
- 59%
- Key Theme
- AWS, advertising, and retail efficiency
In 2025, AWS segment sales increased 20% YoY to $128.7B, while total operating income rose to $80.0B from $68.6B in 2024.
IPS view: AMZN is still a strong compounder, but IPS wants stronger AWS acceleration or margin expansion before upgrading it to Positive Alpha.
9.AAPL — Apple
Neutral / Quality Watchlist- Category
- Elite Compounder / Quality Compounder
- Structural
- 86 / 100
- Tactical
- 58%
- Key Theme
- Ecosystem durability, Services, and AI upgrade optionality
Fiscal Q1 2026 revenue $143.8B (+16% YoY), diluted EPS $2.84 (+19%).
IPS view: AAPL remains a great business, but in Q2 the model still views it as a Quality Watchlist name rather than a top tactical alpha candidate. AI upside is less direct than infrastructure peers and valuation remains a cap.
10.COST — Costco
Neutral / Quality Watchlist- Category
- Elite Compounder / Defensive Compounder
- Structural
- 89 / 100
- Tactical
- 57%
- Key Theme
- Membership model and traffic durability
First 26 weeks of fiscal 2026 net sales $144.85B (+8.6% YoY). February net sales rose 9.5% YoY.
IPS view: COST provides quality and stability, but tactical upside remains limited by valuation and lower direct exposure to the dominant AI infrastructure regime.
Elite Compounder summary
| Rank | Ticker | IPS Category | Structural | Tactical | Model View |
|---|---|---|---|---|---|
| 1 | AVGO | Strong Compounder / AI Infrastructure | 86 | 66% | Positive Alpha Candidate |
| 2 | NVDA | Elite Compounder / AI Infrastructure Leader | 91 | 66% | Positive Alpha Candidate |
| 3 | GOOG | Elite Compounder / AI and Cloud Platform | 87 | 63% | Positive Alpha Candidate |
| 4 | MSFT | Elite Compounder / AI and Cloud Platform | 88 | 62% | Positive Alpha Candidate |
| 5 | ORCL | Strong Compounder / AI Cloud Capacity | 80 | 61% | Positive Alpha Candidate |
| 6 | META | Strong Compounder / AI Advertising Platform | 82 | 60% | Positive Alpha Candidate |
| 7 | ANET | Strong Compounder / AI Networking | 79 | 59% | Neutral / Quality Watchlist |
| 8 | AMZN | Strong Compounder / Cloud + Retail Margin Recovery | 80 | 59% | Neutral / Quality Watchlist |
| 9 | AAPL | Elite Compounder / Quality Compounder | 86 | 58% | Neutral / Quality Watchlist |
| 10 | COST | Elite Compounder / Defensive Compounder | 89 | 57% | Neutral / Quality Watchlist |
Regime Alpha Stream
Q2 2026 IPS Regime Alpha Stock Picks
The Q2 Regime Alpha list remains dominated by AI memory, storage, servers, connectivity, and power infrastructure. The model's Regime Confirmation Score improved for the memory/storage/server basket because several related companies reported stronger revenue, margin, backlog, or guidance signals. That improves the Basket Strength input for names such as MU, WDC, STX, DELL, VRT, CRDO, and ALAB.
1.MU — Micron Technology
Positive Alpha Regime Trade- Category
- AI Memory / HBM
- Structural
- 60 / 100
- Tactical
- 66%
- Key Theme
- AI memory bottleneck and HBM demand
Micron remains the top Q2 Regime Alpha candidate. The Q2 update strengthened both the Revisions and Basket Strength inputs. Micron reported fiscal Q2 2026 revenue of $23.86 billion, up sharply from $13.64 billion in the prior quarter and $8.05 billion a year earlier, with GAAP net income of $13.79 billion.
IPS view: MU remains the cleanest expression of the AI memory bottleneck. The main risk is that memory is cyclical, and upside can reverse quickly if supply catches up or pricing weakens.
2.WDC — Western Digital
Positive Alpha Regime Trade- Category
- AI Storage / HDD Cycle
- Structural
- 59 / 100
- Tactical
- 65%
- Key Theme
- AI-driven storage demand and margin expansion
Western Digital moves higher in the Q2 update because storage fundamentals strengthened. WDC reported fiscal Q2 2026 revenue of $3.02 billion, up 25% year over year, with GAAP gross margin of 45.7% and operating margin of 30.1%. Management also expected fiscal Q3 revenue to be up approximately 40% year over year at the midpoint.
IPS view: WDC is one of the clearest storage-cycle beneficiaries of AI data growth. The main risks are commodity-cycle reversal, valuation after a sharp rerating, and hyperscaler demand normalization.
3.STX — Seagate Technology
Positive Alpha Regime Trade- Category
- AI Storage / Mass-Capacity Data
- Structural
- 58 / 100
- Tactical
- 64%
- Key Theme
- AI data growth and high-capacity storage
Seagate improves in the Q2 update as mass-capacity storage demand remains tied to AI data growth. Seagate reported fiscal Q3 2026 revenue of $3.11 billion, GAAP gross margin of 46.5%, non-GAAP gross margin of 47.0%, and non-GAAP EPS of $4.10. It also generated $953 million of free cash flow.
IPS view: STX benefits from the same storage-cycle tailwind as WDC. The main risks are high cyclicality, valuation after a major move, and the possibility that storage demand cools after hyperscaler inventory builds.
4.DELL — Dell Technologies
Positive Alpha Regime Trade- Category
- AI Servers / Data Center Infrastructure
- Structural
- 65 / 100
- Tactical
- 63%
- Key Theme
- AI server demand and infrastructure buildout
Dell rises in the Q2 update because its AI server backlog and shipment signals improved materially. Dell reported that it closed more than $64 billion in AI-optimized server orders, shipped more than $25 billion during the year, and entered FY2027 with a record AI server backlog of $43 billion.
IPS view: DELL is a stronger Q2 Regime Alpha candidate because AI server demand is now more visible and less speculative. The main risks are server margin pressure, component shortages, and customer concentration.
5.VRT — Vertiv
Positive Alpha Regime Trade- Category
- AI Data-Center Power and Cooling
- Structural
- 70 / 100
- Tactical
- 61%
- Key Theme
- Data-center thermal and power infrastructure
Vertiv moves into Positive Alpha territory because the AI power/cooling regime strengthened. Vertiv reported Q4 2025 organic orders growth of approximately 252%, a book-to-bill ratio of about 2.9x, and backlog of $15.0 billion, up 109% from the prior year.
IPS view: VRT is one of the cleaner non-semiconductor AI infrastructure trades. The main risk is valuation after strong performance and sensitivity to hyperscaler capex cycles.
6.CRDO — Credo Technology
Positive Alpha Regime Trade- Category
- AI Networking / Connectivity
- Structural
- 56 / 100
- Tactical
- 60%
- Key Theme
- High-speed AI data-center connectivity
Credo improves in Q2 because its revenue acceleration was much stronger than expected. Credo reported fiscal Q3 2026 revenue of $407.0 million, up 51.9% quarter over quarter and 201.5% year over year, with non-GAAP gross margin of 68.6%.
IPS view: CRDO has strong upside exposure to AI connectivity bottlenecks, but the model treats it as a regime trade because the stock is more volatile and less structurally proven than the mature compounders.
7.ALAB — Astera Labs
Positive Alpha Regime Trade- Category
- AI Connectivity / PCIe Retimers and AI Fabric
- Structural
- 57 / 100
- Tactical
- 60%
- Key Theme
- Rack-scale AI infrastructure connectivity
Astera Labs moves into Positive Alpha territory because revenue growth and product breadth strengthened. Astera reported Q4 2025 revenue of $270.6 million, up 17% sequentially, and full-year 2025 revenue of $852.5 million, up 115% year over year.
IPS view: ALAB remains a high-upside AI connectivity name. The main risks are valuation, customer concentration, and the need to keep proving growth as AI server architectures evolve.
8.AMD — Advanced Micro Devices
Regime Watchlist- Category
- AI Accelerator / CPU
- Structural
- 76 / 100
- Tactical
- 59%
- Key Theme
- AI accelerators and EPYC server CPUs
AMD remains a Regime Watchlist name. The Q2 view improved slightly because the data-center business strengthened, but competitive risk versus NVIDIA keeps the score below Positive Alpha. AMD later reported Q1 2026 Data Center revenue of $5.8 billion, up 57% year over year, driven by EPYC processors and the ramp of Instinct GPU shipments.
IPS view: AMD has real AI regime exposure, but the model requires stronger evidence that its accelerator franchise can convert demand into sustained SPY-relative alpha before upgrading it above 60%.
9.PLTR — Palantir Technologies
Regime Watchlist / Single-Stock Theme Watch- Category
- AI Software / Applications
- Structural
- 82 / 100
- Tactical
- 58%
- Key Theme
- AI software adoption
Palantir remains a strong AI software name, but the Q2 update keeps it below the top Regime Alpha leaders because of Single-Stock Theme Watch and valuation risk. Palantir later reported Q1 2026 U.S. revenue growth of 104% year over year, total revenue growth of 85%, and raised FY2026 revenue guidance to approximately 71% growth.
IPS view: PLTR still has exceptional AI software momentum, but the model now demands more caution because the stock's risk is concentrated in valuation, crowding, and expectations.
10.CEG — Constellation Energy
Regime Watchlist / Single-Stock Theme Watch- Category
- AI Power / Nuclear Scarcity
- Structural
- 73 / 100
- Tactical
- 56%
- Key Theme
- Data-center electricity demand and nuclear scarcity
Constellation remains on the Regime Alpha list but falls lower because the Q2 model saw weaker tactical confirmation than in memory, storage, servers, and connectivity. CEG's nuclear fleet produced 44,666 GWh in Q1 2026, and its nuclear plants excluding Salem and STP achieved a 92.3% capacity factor.
IPS view: CEG remains a valid AI-power watchlist name, but the setup is less compelling than the memory/storage/server basket. The model keeps Regime Exhaustion Risk and Single-Stock Theme Watch active.
Regime Alpha summary
| Rank | Ticker | IPS Category | Structural | Tactical | Model View |
|---|---|---|---|---|---|
| 1 | MU | AI Memory / HBM | 60 | 66% | Positive Alpha Regime Trade |
| 2 | WDC | AI Storage / HDD Cycle | 59 | 65% | Positive Alpha Regime Trade |
| 3 | STX | AI Storage / Mass-Capacity Data | 58 | 64% | Positive Alpha Regime Trade |
| 4 | DELL | AI Servers / Data Center Infrastructure | 65 | 63% | Positive Alpha Regime Trade |
| 5 | VRT | AI Data-Center Power and Cooling | 70 | 61% | Positive Alpha Regime Trade |
| 6 | CRDO | AI Networking / Connectivity | 56 | 60% | Positive Alpha Regime Trade |
| 7 | ALAB | AI Connectivity / PCIe Retimers and AI Fabric | 57 | 60% | Positive Alpha Regime Trade |
| 8 | AMD | AI Accelerator / CPU | 76 | 59% | Regime Watchlist |
| 9 | PLTR | AI Software / Applications | 82 | 58% | Regime Watchlist / Single-Stock Theme Watch |
| 10 | CEG | AI Power / Nuclear Scarcity | 73 | 56% | Regime Watchlist / Single-Stock Theme Watch |
Model disclaimer
This content is based on an IPS Point-in-Time Indicative model update for Q2 2026. IPS estimates the probability of 12-month SPY-relative outperformance using structural quality, tactical alpha factors, regime fit, and diagnostic risk controls. Regime Alpha names may be more volatile and more cyclical than Elite Compounder names. This is not a price-target model, investment advice, or a guarantee of future performance.