3 Stocks to Sell and 3 Stocks to Buy for September

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**SPEAKER_2** (0:27)
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**Susan Dziubinski** (0:50)
Hello, and welcome to The Morning Filter Podcast. I'm Susan Dziubinski with Morningstar. Every Monday before market open, I sit down with Morningstar Chief US Market Strategist Dave Sekera to talk about recent market activity, what investors should have on their radars for the week, some new Morningstar research, and a few stock ideas.
Now we have a programming note for viewers. We will not be airing a new episode of The Morning Filter next Monday, September 7th, due to the Labor Day holiday, but we'll be back bright and early on Monday, September 14th, just in time for that next Fed meeting. All right, well, good morning, Dave. Let's kick off today with some of your key takeaways from last week's market activity.

**Dave Sekera** (1:34)
Good morning, Susan. Well, if we're on the topic of the Fed, I mean, the first thing to review will just be the statement that the new Fed share warsh provided at the end of last week. Turns out he's a little bit more hawkish than I think the market had expected. So if we look at the futures market, the market's now pricing in a hike sooner rather than later. I think this morning it's over a 60 percent probability the Fed's going to hike at the September meeting.
A week ago, I think that was only a 40 percent probability. Either way, it's a 90 percent probability they'll hike at least once by the December meeting. But in my mind, I don't think it really matters. I mean, whether they hike in September, the October meeting, the December meeting. I don't think in the big grand scheme of things, which month they hike really is going to make a difference in the marketplace. Honestly, when I think about the market activity last week, it was about Nvidia, Nvidia, and did I mention Nvidia?
Now, I know we'll address Nvidia earning specifically later in the podcast, but I think really when you think about Nvidia and why it's such a driver of the market, it's not just because of the size of the market cap of the stock, but really when you think about artificial intelligence and you think about the AI build-out boom, they have really the most comprehensive view of any other player in AI out there. So if you think about it, they've got the best visibility into all the AI platforms, they have relationships with Anthropic, OpenAI, XAI, all the big AI LLMs out there. They have relationships with all of the hyperscalers, they have relationships with everybody that's building data centers. Essentially, when you think about AI, Nvidia touches the entire AI economic chain. So that's why I think Nvidia earnings and their conference calls are so important because really, you get that big comprehensive view of what's going on across all of those different segments as opposed to a lot of the companies that really only talk about the individual market that they're in.
So I'd say the big takeaway following Nvidia earnings from our analyst team and looking at the valuations of all of the AI stocks. Overall, even though a lot of those commodity-oriented tech hardware stock, beginning a month ago, they're a lot lower than where they were, we're still cautious on a lot of those stocks. But if you look at those who are at the leading edge of AI such as Nvidia, we still think they have a lot of room to run for now.

**Susan Dziubinski** (3:55)
All right. Now, we also saw some movement last week in software stocks. So talk a little bit about that.

**Dave Sekera** (4:03)
Sure. So I think at the market, it's just finally starting to get comfortable with the thought that the death of software has been greatly exaggerated.
I'm sorry, I have a little problem with my voice. So yeah, just a little bit more coffee here.
So our investment thesis on software has been for quite a while, even in the face of these software stocks, haven't fallen for the past 12 to 18 months that generally software companies are incorporating AI into their own products and services. They're adding more economic value to their clients. And yes, a lot of these smaller, very niche-y software providers might be at risk. The big, large, major platforms are not going away. Clients are not going to replace those software providers by trying to vibe code their own platforms. It's just too much of a major business risk to a disruption of their own business. And at the end of the day, I still think there are a lot of economies of scale of using these outsourced vendors as opposed to trying to do it in-house.