What CEOs are Saying: 2Q Was Big, Expect More Growth

As markets tap new highs, some CEOs of smaller public companies know what investors in the small-cap Russell 2000 know: its valuations are about in line with the S&P 500.

The Russell 2000 Index (RUT), up about 33% over the past year, is trading at roughly 20x estimated forward earnings. The S&P 500 (SPX), up about 20%, is trading at roughly 22x forward earnings.

After the Russell 2000 was reconstituted earlier this year, the fear was that the reduced weight of AI infrastructure plays, from 15% to 7%, would remove a big source of gains. Goldman Sachs in July projected low single-digit returns for RUT over the next 12 months.

Some of the CEOs who spoke with us in recent days, including some whose stocks are trading in the Russell 2000, would disagree. Chief among them, Extreme Networks (EXTR) CEO Ed Meyercord, whose company in the Russell 2000 has outpaced analyst earnings expectations for multiple quarters. He says his company’s AI-powered networking platform is taking market share from Cisco (CSCO) and Hewlett Packard Enterprises (HPE). See Extreme Networks CEO on 8 Straight Earnings Beats and AI Growth

SoundHound AI (SOUN) CEO Keyvan Mohajer discusses growth in voice AI solutions and expansion through mergers and acquisitions. See SoundHound AI (SOUN) CEO on Earnings, OASYS & Recent Acquisitions

Elanco Animal Health (ELAN) CEO Jeff Simmons discusses the company's growth strategy in pet and farm animal health and its Bayer Animal Health integration. Elanco CEO Sees More Growth Ahead for Pet & Farm Animal Health

GraniteShares CEO Will Rhind offered his outlook on technology and discussed dispersion in the market, and AI infrastructure stock price swings as earnings season comes to a close. “Companies are reporting what at any other time would be great, impressive earnings, but it is not enough for the market. And other companies are perceived to be winning in terms of AI strategy ... The market is rewarding companies like Microsoft (MSFT) and Amazon (AMZN) vs companies that might have some more work to do like Apple (AAPL).” GraniteShares assets under management include leveraged single-stock exchange-traded funds and other alternative ETFs. He is watching Initial Public Offerings on the horizon. See GraniteShares CEO Breaks Down SpaceX, AI Stocks, and Upcoming IPOs

Amplify ETFs CEO Christian Magoon explains his firm’s fixed income funds, which seek higher yields with interest income and option writing. He discusses how the strategies can help hedge against rising interest rates while providing investors with a more consistent income stream. See Amplify ETFs CEO on HYGM, LQDM & Yield-Focused Fixed-Income ETFs

Also see our other recent CEO interviews:

• Ethos Technologies (LIFE) CEO Peter Colis on building a mass-market brand to democratize life insurance sales online. See Ethos CEO Peter Colis on Triple-Digit Growth & Future of Digital Life Insurance
• American Superconductor (AMSC) CEO Daniel McGahn discusses record quarterly revenue and a significant backlog including a new $25 million utility project. See AMSC CEO on Expanding Across Mining, Energy, and Data Center Infrastructure
• Trex (TREX) CEO Adam Zambanini on consumer habits post-pandemic, the state of the housing market and demand for deck material. See TREX CEO on ROI with Composite Decking | Morning Movers
• Trinity Capital (TRIN) CEO Kyle Brown on demand for private credit from small businesses, startups, space/frontier technology markets, and AI infrastructure. See Trinity Capital CEO on Record Fundings, AI, and Frontier Tech Growth
• Aristotle Pacific Capital CEO Dominic Nolan on the firm's $31 billion in liquid credit investing strategies. Aristotle Pacific Capital CEO on Finding Value in Credit With Active ETFs

ECONOMIC DATA (ET), Wednesday, Aug. 12:

• 07:00 AM: MBA Mortgage Applications
• 08:30 AM: Consumer Price Index (CPI)
• 10:30 AM: EIA Oil Inventories
• 1:00 PM: 10-Year Note Auction
• 2:00 PM: Treasury Statement

EARNINGS SNAPSHOT:

• Premarket Wednesday: Nebius Group (NBIS), Amcor (AMCR), Brinker International (EAT)
• Postmarket Wednesday: Cisco Systems (CSCO), Cerebras Systems (CBRS)
• Premarket Thursday: JD.com (JD), Tapestry (TPR), Birkenstock (BIRK), YETI (YETI), Bullish (BLSH), Intuitive Machines (LUNR)
• Postmarket Thursday: Applied Materials (AMAT)

This material is intended for informational purposes only and should not be considered a personalized recommendation or investment advice. Investors should review investment strategies for their own particular situations before making any decisions.

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