Valuation-driven rotation in semiconductor cycle
Gil Luria argued that semiconductor stocks with less demanding valuations, like Nvidia and Micron, present safer opportunities than highly valued peers like Broadcom, AMD, and Intel.
The argument
Luria noted that while some stocks trade as if the cycle peak is in 2030, others like Nvidia and Micron are priced for a peak next year, making them safer bets. He argued that hyperscalers will continue heavy CapEx spending, keeping margins stable, but playing the cycle requires valuation discipline.
The thesis, stress-tested
✓ What validates it
- ✓Nvidia and Micron maintain high gross margins in upcoming quarters
- ✓Hyperscalers announce further CapEx increases
▸ Risks discussed
- ▸AI adoption or diffusion slows down
- ▸Hyperscalers cut CapEx spending
- ▸Pricing power erodes faster than expected
Hear it yourself
"He writes the following, we found out how on edge investors are about technology. If the beat isn't big enough, the consequences were severe. Value was shifting quickly as the bottlenecks emerge. Gil joins us now for more. Gil, welcome. Lisa Shalock called it a bit of a a bit of a red flag for the semis trade. Do you consider it a red flag or just a small crack? A small crack. Let let's not forget. Broadcom just grew revenue 50%. It grew its AI revenue a 143%. So it's a very good result, but investors had now been trained to expect a lot more than that."
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