5 Stocks to Watch in August

Geopolitical tensions in the Middle East continue to influence energy prices, while investors remain focused on whether AI spending by the world's largest technology companies can deliver meaningful returns. Seasonally, August and September have historically been weaker months for equities, making stock selection especially important.

SpaceX: Strong growth, but AI spending under scrutiny

SpaceX delivered a strong set of Q2 results, with revenue jumping 92% year-on-year to $7.81 billion, comfortably beating expectations of $6.93 billion, while its net loss narrowed to $541 million from $1 billion a year earlier. Growth was driven by strong performance across its Space, Connectivity and AI divisions, with management reaffirming its target of $100 billion in annual revenue by the end of the year. However, despite the impressive top-line growth, the stock fell in after-hours trading as investors focused on a sharp increase in capital expenditure, which surged to $18.4 billion as the company ramps up AI infrastructure investment. While SpaceX's long-term growth story remains compelling, investors will be watching closely to see whether its heavy AI spending can translate into sustainable profitability.

Chart 1: SpaceX 

Past performance is not a reliable indicator of future resuls. 

Microsoft: Time for a fresh start 

Microsoft’s Q2 results were warmly welcomed by the market, and the stock price jumped 16% on the day after the results, eroding YTD losses that had hit more than 20% before this report. Revenue and income both rose by 18% last quarter, beating estimates. Quarterly capex more than doubled compared to a year earlier, but the company has strong free cash flows of more than $19bn, suggesting that it is monetizing its AI investments. The company’s Azure cloud unit posted full year fiscal 2026 revenue at $100bn for the first time, which is easing fears about its AI prospects. Microsoft also announced that it had 30mn subscribers for its Copilot assistant. 

Microsoft’s share price is still down 6% YTD, and it has a reasonable P/E ratio of 21, which is why investors are stepping back into the trade. Microsoft could be a beneficiary of an AI rotation trade this month, with investors turning away from expensive chip stocks, and towards hyperscalers that have a track record of monetizing their AI investments. 

Chart 2: Microsoft

Past performance is not a reliable indicator of future resuls. 

Exxon Mobil: The $100 per barrel trade 

This trade could be a good hedge if Middle East tensions notch up a gear in August, and the oil price rises back to $100 per barrel. When we saw oil prices surge earlier this year, the oil majors were the unsurprising winners in the stock market. The stock price is higher by 30% YTD, but with a price to earnings ratio of 26, this stock still looks like a reasonably priced hedge for an uncertain few weeks. 

Added to this, Exxon is also embarking on a $20bn share buyback scheme this year, as the company boosts shareholder returns with all its excess cash. 

Chart 3: Exxon Mobil 

Past performance is not a reliable indicator of future resuls. 

HSBC: European banks are back 

The European banking stock index is one of the top performing major indices so far in 2026, behind the South Korean Kospi and Japan’s Nikkei. HSBC will also report its Q2 results on August 4^th before UK markets open for business. The focus will be on whether the new (ish) CEO’s turnaround plan has paid off. The company missed earnings estimates last quarter, and reported earnings per share of $2.0 vs. expectations of $2.12. 

The fact that interest rates are on pause for the long term, based on the recent BOE meeting, suggests that HSBC might be able to benefit from  higher net interest margins over the long term. The stock price has benefited from interest in the European banking sector, and is higher by 33% YTD. However, with a P/E ratio of just 16, this stock still looks like a bargain. It also looks well placed to benefit from 1, an uncertain environment for risk this month, and 2, for a desire to diversify away from global AI stocks. 

Chart 4: HSBC 

Past performance is not a reliable indicator of future resuls. 

ASML: Has the stock fallen far enough? 

This stock has fallen sharply in the past month and is down 13%, on the back of rising Chinese competition fears. The stock is still up 36% on a YTD basis. ASML’s performance in the coming weeks will be an important measure of whether the chip stock trade still has legs since it produces the technology necessary to produce semiconductor chips. There is something for both the ASML bulls and bears this month. The bears might think that the stock has not sold off far enough, especially if the chip sector remains volatile in the coming weeks. However, the bulls may think a 13% decline into correction territory is a good entry point given its recent strong set of earnings results. The company raised its full year sales guidance for 2026 to EUR 43bn – EUR 45bn. It also expects a gross margin of 54% - 56%. This may be enough to entice fresh buyers. 

Chart 5: ASML

Past performance is not a reliable indicator of future resuls.