Four stocks across data storage, AI infrastructure, medical devices, and biotech are showing strong setups into year-end. Felix Prehn, who runs Goat Academy, highlights why these sectors are gaining momentum and what makes each company interesting now. This article explains the trends in simple terms and defines any technical words along the way.
AI data is exploding
- Why it matters: Every AI tool needs huge amounts of storage and power. Data centers already use around a tenth of U.S. electricity and keep growing. Cloud spending is still rising fast. This pushes demand for both storage makers and the facilities that host AI systems.
Healthcare tailwinds
- Why it matters: An aging population and more chronic conditions increase demand for home-based care and new treatments. Medical devices for the home and select biotech areas are seeing steady growth.
- Western Digital (WDC) — Data storage backbone
- What they do: Western Digital makes hard disk drives (HDDs) and flash storage used by big cloud and AI customers.
- Why it’s interesting: Hyperscale data centers still rely on HDDs for cheap, reliable long‑term storage. The storage market is projected to grow steadily, and this firm operates in a near duopoly with one major rival, which can support pricing power.
- Recent momentum: Revenue growth has improved, margins are recovering, and management has shown confidence by raising its dividend.
- Simple definition: Hyperscale data centers are huge facilities run by tech giants to power cloud and AI. A duopoly means only two major sellers dominate a market.
Key risks: Storage is cyclical, meaning results can swing with supply and demand. Watch for order slowdowns after big build cycles.
- Equinix (EQIX) — The “landlord” of AI
- What they do: Equinix is a data center REIT that leases secure, power‑dense space with advanced cooling to thousands of customers.
- Why it’s interesting: As AI models and cloud services scale, firms need ready-to-use facilities with power and cooling in place. Equinix also offers “interconnection,” letting customers link directly to each other and to major clouds in the same building. This creates a network effect that can be hard to copy.
- Income angle: As a REIT, the company must pay out most of its taxable income as dividends, creating a steady income stream for shareholders.
Simple definitions:
- REIT (Real Estate Investment Trust) is a company that owns income‑producing real estate and pays most income to investors as dividends.
- Interconnection is a private, low‑latency link between customers and cloud providers inside the same data center.
Key risks: High capital costs to build facilities, rising energy costs, and competition from other data center REITs.
- Tactile Medical (TCMD) — At‑home treatment for lymphedema
- What they do: Tactile Medical makes devices for home use that help treat lymphedema, a condition where fluid buildup causes swelling, often in arms or legs, sometimes after cancer treatment.
- Why it’s interesting: Home‑based care is growing because it is more convenient and can reduce hospital costs. The company’s Flexitouch system uses controlled air pressure to help move fluid and reduce swelling.
- Market note: The addressable market is expanding as awareness and diagnosis increase.
- Simple definition: Gross margin is the share of revenue left after direct costs to make a product. Higher gross margins can help fund growth and profits.
Key risks: It’s a smaller company, so the stock can be more volatile. Coverage decisions, competition, and clinical results can move the shares.
- Cytokinetics (CYTK) — Biotech with muscle function focus
- What they do: Cytokinetics develops medicines that target muscle function, aiming to help patients with conditions that weaken the heart or skeletal muscles.
- Why it’s interesting: Select biotech names can deliver outsized gains when trial data or approvals go well. This company targets important unmet needs where new options are valuable.
Simple definitions:
- Early‑stage biotech means revenue is limited, and success depends on clinical trial milestones and approvals.
- Pipeline is the set of drug candidates in testing.
Key risks: High risk, binary outcomes around clinical data, and potential share swings around earnings or trial news.
Putting it together: a simple risk framework
- Diversify: Avoid putting too much into one theme or stock. Consider smaller positions in riskier names.
- Use rules: Pre‑decide your maximum loss per position with a stop loss. Let winners run and cut losers early.
- Watch the money flows: Price and trading volume can show when large investors are buying or selling.
Sector cheat sheet
- Data storage (WDC): Benefits from AI’s need to store huge amounts of data at low cost.
- Data center REITs (EQIX): Benefits from demand for power, cooling, and interconnection for AI and cloud.
- Medical devices (TCMD): Rides the shift to at‑home care and rising awareness of lymphedema.
- Biotech (CYTK): High risk/high reward based on clinical progress in muscle‑related diseases.
For readers who want to learn more about the people behind Felix Prehn’s Goat Academy, see this page: Felix Prehn Goat Academy.