Hey,
Charlie here.
Licia Leslie is back with her weekly One to Love, One to Leave, and this week both picks are riding the same wave from opposite ends.
The AI trade has split into two camps. There are the companies actually building the thing, the power, the land, the racks of chips that every model on earth needs to run. And there are the names that already cashed the AI check, ran for a year straight, and are now priced like nothing can go wrong.
Licia's pick to love lives in the first camp. It is the unglamorous, picks-and-shovels part of the boom, the kind of moat you cannot code your way around or conjure up overnight. While everyone else fights over chips, this company already locked up the hard part.
Her pick to leave is the opposite story. Great business, monster run, and a stock that has now climbed right past what Wall Street thinks it is worth. The chart is starting to roll, and that usually shows up before the headlines do.
One breaking out, one breaking down. Here's Licia with the breakdown.
Hi Traders,
This week let's buy calls in IREN Limited (IREN) and puts in Fortinet (FTNT). Here we go.
IREN is breaking out, and it is bullish:
It is trading over the median line (the centerline of my pitchfork tool, where price tends to gravitate) into the next channel. The Relative Strength Index (a momentum gauge that tells you whether a stock is gaining or losing steam) is moving bullish while the MACD (another momentum read) just turned green today. All bullish signals.
Wait for IREN to close over, or trade consistently over, $66 before entering your calls.
My price target is $76.40. Use a close back below $66 as your stop loss (the price where you cut the trade if it turns against you).
IREN is the company that builds the physical guts of the AI boom. It owns and runs large, grid-connected data centers in power-rich regions across North America and Europe, all on renewable energy. While everyone fights over chips, IREN already locked up the land and the power, which is the part you cannot fake.
The business runs on three pillars: renting out NVIDIA GPUs to companies training AI models, mining Bitcoin with the same infrastructure, and leasing space and power to outside customers who need heavy compute. The GPU cloud pillar is the growth engine now.
Earlier this month IREN signed a five-year, $3.4 billion AI cloud deal with NVIDIA and a partnership to build up to five gigawatts of AI infrastructure. NVIDIA even took a five-year right to buy 30 million shares at $70. When the chip maker itself is buying into your buildout, the market pays attention.
After an extended run, Fortinet is topping out here:
Now look for a close, or consistent trading, below $127. Also wait for the RSI to move below 70, which is a sell signal.
Below $127, FTNT has plenty of room to drop to $121.38 and then $112.46.
Always use a trailing stop loss (a stop that follows the stock down to lock in your gains) beginning with a close over $128.80.
FTNT is one of the biggest names in cybersecurity. Its FortiGate firewalls and Security Fabric platform bundle networking and security into one system, and most of the revenue comes from recurring subscriptions and support, which is the high-margin business Wall Street loves.
The company is fine. That is not the problem. The problem is the stock: FTNT is up more than 60 percent over the past year while the broad market barely moved, and it is now trading above the average analyst price target near $108.
Strong earnings already got paid for. When a good company runs this far past what the street will pay, the chart usually tells you before the news does.
Trade Accordingly,
Licia Leslie
Two stocks, two directions, one idea: where a name sits in its run matters more than how good the story sounds.
IREN is early, with the power and the NVIDIA deals to back it up. FTNT is late, a strong company whose stock got ahead of itself.
Licia is not betting against cybersecurity or cheering for crypto. She is reading the charts and trading the setups in front of her, which is the whole game.
The crew goes through the watch list live on Monday's Ticker Highlight Show. Will either of Licia's picks make the cut?
Tap this to join the Ticker Highlight Show Premium before Monday at 10:30 a.m.
Take care,
Charles Delvalle
Editorial Director, Option Pit