Investors are watching another key week of earnings results, with attention centred on whether megacap technology companies can justify heavy AI-related spending. While market leaders such as Amazon and Apple remain dominant franchises, questions around valuation discipline and long-term returns are becoming harder to ignore.
BNN Bloomberg spoke with David Dietze, chief investment strategist at Dietze Wealth Management Group, about what investors should watch in upcoming earnings, how AI spending is reshaping market expectations, and why select opportunities may lie outside expensive megacap technology stocks.
Key Takeaways
- Investors are increasingly focused on whether AI-related capital spending can deliver clear profitability, following sharply different market reactions to recent tech earnings.
- Long-term winners like Amazon and Apple still face competitive and innovation pressures, particularly as AI capabilities become a key differentiator.
- Valuations remain a major risk, with several megacap technology stocks trading at historically elevated multiples that limit future return potential.
- Healthcare insurance tied to senior demographics offers potential upside despite near-term policy uncertainty around government reimbursements.
- Consumer staples and other dividend-paying sectors may benefit if investors rotate away from expensive growth stocks in search of value and income.
Read the full transcript below:
ANDREW: Amazon and Alphabet are set to report their latest results this week. Let’s get more on that from David Dietze, chief investment strategist at Dietze Wealth Management Group. David, it’s great to see you. Sometimes I think about Amazon and Apple. You could make a case that these would be stocks just to buy and hold forever without even looking at them now because they’ve grown so much. Maybe we can put up a 10- or 20-year chart. But Apple, of course, has had some bumps along the way, particularly lately.
DAVID: Yeah, absolutely. I mean, they have been all-time legendary winners. And the question is, where do they go from here? They’re in slightly different situations. One, of course, Apple is highly dependent on iPhone sales. By all accounts, the new version 17 is doing extremely well. But on the other hand, of course, people have choices. They’ve got Samsung, they’ve got other brands. And of course, at this point, it’s all about what are the capabilities of the phone. Apple has lagged a little bit in terms of incorporating AI capabilities into the phone, and of course that’s one thing we’re going to be watching.
There’s also been a knock on the iPhone 17. It’s not really that much better than the 16. Nevertheless, people are buying that. Of course, we also need to look at the all-important services aspect, the various apps and so forth via the App Store that they’re selling, which has higher margins and higher growth prospects. We need to hear from them on that.
ANDREW: Yeah, I’m just looking here at a five-year comparison between the two stocks. Apple has doubled over five years, whereas Amazon has been a laggard. It’s up only 43 per cent. I wonder why that is. Is it partly because of concerns about competition from the Chinese e-commerce players?
DAVID: Well, that’s one aspect. The other aspect, of course, is valuation, where Amazon has always had a nosebleed valuation. For the most part, even people like Warren Buffett have said Amazon has been a fantastic company, but you are paying, at certain times, price-to-earnings ratios that were approaching triple-digit levels. So I think that’s one reason there’s been a difference in terms of outcome.
Apple, for example, when Warren Buffett’s Berkshire Hathaway started buying it, was down in the low-teens price-to-earnings ratios. Now, of course, it’s a lot more expensive. So that’s one thing to watch.
In terms of Amazon, of course, they’ve got two great businesses. They’ve got their hyperscaler cloud business that they’re marketing very successfully, and they’re a leader there. They’ve also got the Amazon store, where, of course, they started with books. Now they sell everything, and they sell everything on behalf of third parties as well. That’s a lower-margin business.
But AI is stalking all these companies. Of course, they’re trying to make strategic investments with AI partners because they need to incorporate that rapidly into all of their businesses. That’s not going to come cheap. We heard from Microsoft last week that if you spend too much and can’t show the results, there’s going to be a nasty selloff. But we also heard from Meta last week that if you spend a lot and can show Wall Street the results in terms of profitability, you can fare very well with your stock. And that’s what we’re going to be looking for with Amazon.
ANDREW: And Amazon, of course, put something like $70 million into that movie about Melania Trump. Will you be going to see that one, David?
DAVID: You know, it’s not on my calendar, but it’s all about what my wife wants to see. Let’s be quite honest with you.
ANDREW: OK, yeah, that’s a good policy. All right, you have some stock ideas for us. Humana — it’s been tough on the health insurers, but you see upside here.
DAVID: Yeah. So Humana is down about two-thirds from its all-time high. I like Humana because it’s in one of the best areas of the health-care business. It’s in health insurance focused on seniors and is also focused in the Sun Belt area of the United States, which is gaining population.
So the problem with Humana is also its forte. Its forte is so-called Medicare Advantage. In exchange for having a restrictive network of doctors that you go see, you pay less, you have caps on your out-of-pocket costs, you can get dental, you can get vision, you can even get gym memberships. That’s very attractive to America’s seniors, which is the fastest-growing demographic here, and so their business is growing leaps and bounds.
However, they need to get reimbursed from the government, and unfortunately the government’s coffers are under pressure. They just announced that instead of the four to five per cent increase in reimbursement to the Medicare Advantage players, it could be close to zero. Who knows what’s going to happen, but to me it sounds a lot like those initial proposals back in April of last year — those initial, ginormous tariffs that were an opening negotiating posture. Of course, Trump retreated. I think we could see that here, because at the end of the day, the insurers are going to make money. They’re just going to have to reduce benefits if they don’t get the right reimbursement. That won’t make seniors happy. Seniors vote.
So I think the downside with Humana is a lot less than the potential upside if the government relaxes those reimbursement policies.
ANDREW: Campbell’s — that stock’s been under pressure. And of course, packaged food companies have had trouble, in some cases, from generic competition.
DAVID: Yeah, absolutely. And artificial dyes — they’ve been the punching bag for everything unhealthy in America today. However, at this point, you’re at about a 10-year low with the stock. It’s trading at about 11 times earnings. It’s going to generate about $8 billion in revenue, but it’s only a $6-billion company. You’ve got a nice four per cent-plus dividend.
I think that’s a situation where they’ve got new leadership. They can cut costs and stay really focused. Of course, their snack business is very profitable. You’ve got Kettle chips, Cape Cod chips — all those things we probably shouldn’t like as much as we do.
So I think you’ve got some iconic brands on sale. I think the consumer staples area could take the baton if people continue to shift out of hyper-expensive megacap tech and start looking for other areas, including ones that pay nice dividends.
ANDREW: And H&R Block — we’re all looking forward to tax season now. What attracts you to this name right now?
DAVID: Yeah. So this stock, again, is down about 40 per cent from its high. It’s paying about a three-and-a-half to four per cent dividend and trading at about eight times earnings — very cheap. The concern has been that AI is going to make doing your taxes a breeze. I think that’s exaggerated.
I also think with the One Big Beautiful Bill Act that’s been enacted, there are going to be additional provisions people will want help with. H&R Block is an iconic name, and that business is growing. In fact, it’s projected to grow earnings in the low double-digit percentages for the next three to five years.
It’s also a relatively small company that could easily be put into the pocket of one of the large financial institutions. With tax season coming, I think they’re going to see a surge in business. They need to stay focused on that. I think this is a nice place to sit and collect a dividend in an otherwise very pricey market.
ANDREW: David, thank you very much indeed.
David Dietze, chief investment strategist at Dietze Wealth Management Group.
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This BNN Bloomberg summary and transcript of the Feb. 2, 2026 interview with David Dietze are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
