Image Source: Pixabay

Five Stocks of the Week

Technology Stock of the Week: Cisco (CSCO)

Cisco (CSCO) is emerging as a compelling bullish trade in the AI space as Wall Street sharpens its focus on the compute infrastructure powering artificial intelligence.

While chipmakers and OpenAI dominate headlines, Cisco represents a quieter but potentially explosive opportunity in the data center trade.

The networking giant has repositioned itself at the heart of the AI data center buildout.

In fiscal 2025, Cisco reported over $2 billion in AI-related revenue - just 4% of total revenue - but that figure likely underrepresents the broader impact of AI-driven demand on its networking and software segments.

Management has credited AI as a key driver of its improved outlook, and the recent earnings trend supports this shift.

After three quarters of revenue contraction, Cisco has posted average growth of nearly 10% across three of the last four quarters. Earnings per share have also steadily climbed 5% annually over the past three years, signaling early returns on its AI investments.

Technically, the stock is up 32% year-over-year but has traded in a tight range for the past two months.

The two-month consolidation pattern suggests a bullish breakout is nearing.

A close above $69 would trigger a momentum move toward $75 in the near term, with a long-term bull market target of $85.

(Click on image to enlarge)

Growth Stock of the Week: Iron Mountain (IRM)

Remember the old Iron Mountain storage boxes?Well Iron Mountain (IRM) is no longer just a paper storage company, it’s a key player in the digital data infrastructure powering AI.

While most investors chase flashy chipmakers, Iron Mountain is building the physical backbone for AI data centers, and the market is starting to take notice.

The company just posted strong results, with revenue growing nearly 8% year-over-year.

But the real story is in their data center business, which grew over 20% last quarter.

Iron Mountain has 424 megawatts of data center space - mostly leased - and another 185 megawatts under construction. The company’s newest project is a $1 billion data campus in Virginia, which will be critical to meeting rising AI demand.

Iron Mountain is diversifying its AI businesses beyond the data center with its “Asset Lifecycle Management” (ALM) division.

As companies replace servers more often to handle AI workloads, Iron Mountain helps manage, recycle, and securely destroy old equipment. This business is growing fast and benefits directly from the AI compute surge.

IRM raised its full-year outlook and boosted its dividend by 10%, showing confidence and strong cash flow.

Technically, the stock is trading near recent highs after a 20% rally. That, and a breakout above $105 sets up a move toward $120–$125 as momentum shifts into a bullish pattern.

Bottom line: Iron Mountain is another overlooked winner in the AI infrastructure race - low flash, high cash, and strong momentum.

(Click on image to enlarge)

Stock Under $10 of the Week: Lumen Technologies (LUMN)

Lumen (LUMN) is quietly transforming from a legacy telecom into a critical AI infrastructure provider.

The company has raised 2025 capex by nearly 30% to expand its enterprise fiber network, building the high-speed backbone needed to move AI workloads across cloud platforms.

Strategic partnerships with Microsoft and Google reinforce that shift, while the recent $5.75B sale of its consumer fiber business to AT&T allows Lumen to reduce debt and refocus on its core growth segment.

The company’s financials are improving.

Last quarter, Lumen posted a narrower-than-expected loss and raised full-year free cash flow guidance to $1.4 billion. But the more actionable signal is coming from the chart.

A “Golden Cross” formed just weeks ago, signaling the start of a longer-term trend reversal.

This week, price action confirmed the pattern with a breakout that triggered a volatility rally setup as the shares crossed above $6.70, indicating a sharp move higher is underway.

The short-term price target for the volatility rally is $8.

Traders should expect a brief consolidation near that level before momentum resumes toward the next upside target at $10.

With sentiment towards Lumen Technologies shifting along with the technical trends, this setup offers a rare opportunity to position ahead of broader recognition.

(Click on image to enlarge)

Income Stock of the Week: VanEck High Yield Muni ETF (HYD)

The bond market is entering a more complicated phase for income investors.

With the Fed preparing to cut rates and economic uncertainty still elevated, traditional fixed income strategies are losing clarity. Yields on short-term Treasuries are starting to fall, while long-term rates remain sticky.This is creating crosswinds that make it harder for investors to lock in reliable income.

That’s where VanEck High Yield Muni ETF (HYD) comes in.

HYD offers exposure to higher-yielding municipal bonds, many of which are unrated or below investment grade, but historically resilient during disinflationary and rate-cutting environments.

The current 5.2% tax-free yield is equivalent to roughly 7% taxable for top-bracket investors, making it one of the most attractive passive income trades left in the market.

Technically, the setup is improving.

HYD recently reclaimed its 50-day moving average and is approaching a resistance level near $48. A confirmed breakout would trigger a volatility pivot, a setup where income-focused ETFs catch a bid as rate-sensitive assets realign with the Fed’s dovish policy shift.

The ETF’s underlying net asset value has stabilized after 18 months of pressure, and upside potential exists if credit spreads tighten and flows return to muni bond funds in Q4.

Income investors can no longer rely on 5% money markets as the Fed lowers rates.

HYD offers a compelling combination of yield, tax efficiency, and technical upside—with a short-term price target of $50 and longer-term potential if Fed cuts accelerate into 2026.

(Click on image to enlarge)

Bearish Stock of the Week: American Airlines (AAL)

Airline stocks are rolling over as consumers rethink their travel plans.
Last month, Delta Air Lines reported a slowdown in non-business travel bookings as consumers brace for a potential recession.

More broadly, airline traffic is showing early signs of softening. U.S. enplanements fell 1.2% in June, and global demand growth has stalled. Load factors are at risk as capacity continues to outpace demand. With economic uncertainty rising, the sector is shifting from acceleration to reversion. Investors should watch for margin pressure and fading travel momentum.

While Delta remains well-positioned in the business travel segment, American Airlines is getting squeezed. Q2 load factor dropped to 84.7%, and domestic traffic also weakened in Q1. With capacity still rising, the setup points to margin compression and downside risk for AAL stock.

Shares recently fell back to their August lows near $11 after running into resistance at $13, the level marked by the 200-day moving average, which remains in a bearish trend.

A short-term “dead cat bounce” has now pushed shares to $12, but the 50-day moving average is now also turning bearish.

The combination of overhead resistance and weakening fundamentals supports a bearish outlook, with a likely test of psychological support at $10 in the next 4–6 weeks, roughly a 15% decline from current levels.

A confirmed break below $10 would open the door to further downside, with a price target of $8. American Airlines remains in a long-term bear market trend.

(Click on image to enlarge)

More By This Author: