Wall Street Investors: Don’t Put Money In “Tech Power” Stocks – FAANG
Hunting for a smartphone or a full-option car (with lots of technology) has never been as difficult as it is now.
|The global thirst for chips has forced automakers to remove some high-end features from their vehicles. Photo: AFP|
Paul Meeks, a leading investor in the technology sector, warned that Wall Street is underestimating the current semiconductor crisis. This investor believes that the thirst for semiconductor chips will last a few more years instead of a few months to be able to solve the problem.
“This (semiconductor chip shortage – BTV) could continue into 2023,” said Paul Meeks, portfolio manager at Independent Solutions Asset Management (USA).
Having run the world’s largest technology investment fund for Merrill Lynch Financial Management Company (USA) during the dot-com bubble, Paul Meeks believes that the current thirst for semiconductors will leave the system behind. negative implications.
“Some companies won’t be able to ship the goods. And if they can’t ship the goods, their profits won’t live up to expectations,” said Paul Meeks. “The shares of these companies are going up, but then they will cool down, even fall deeply,” this investor said.
The paradox is unfolding as US businesses and consumers are suffering the consequences of supply chain disruptions and supply shortages, while semiconductor stocks have surged. For example, the VanEck Vectors Semiconductor ETF has skyrocketed 35% in the past 6 months.
Mr. Paul Meeks had bet on the rise of semiconductor stocks at the beginning of June 2020, many months before information about the thirst for semiconductor chips spread in newspapers and technology news sites. This investor still believes that semiconductor stocks still have a lot of room for growth.
This investor cited, Broadcom and Microchip Technology are two typical businesses that have successfully managed to meet orders before the Covid-19 epidemic spread.
Although optimistic about semiconductor stocks, but portfolio manager at Independent Solutions expressed concern about the rise of “power technology group” (FAANG) stocks, including: Facebook, Apple , Amazon, Netflix, and Alphabet – the parent company of Google.
“About 50% of the business these businesses come in is related to iPhone products,” noted Mr. Paul Meeks. “The large shortage of goods cost them billions of dollars in revenue last quarter,” the investor added.
Regarding the buy recommendation, the representative of Independent Solutions said that Google will probably be the only stock in the FAANG group that is considered to buy and pour money right away with the expectation that the profits of the digital technology industry will recover strongly.
In addition to Google, Microsoft is also in the group of stocks that Mr. Paul Meeks recommends holding. Microsoft stock is up 15% in the past month and is up 51% year-to-date.
The global thirst for semiconductors is on the rise ahead of Christmas and New Year 2022 as a series of customers are frustrated by not receiving the product as expected or even not being delivered on time.
Electric vehicle and energy news site Electrek has just reported that some Tesla customers have complained about the lack of USB pins in the Model 3 and Model Y models. Specifically, the USB-C port in the dashboard. The center and rear seats only have a waiting slot that has not been completed, making it impossible for people to charge mobile devices in the car. The cause for this inconvenience comes from the semiconductor chip crisis.
Other car manufacturers are also in the same situation. BMW recently announced the removal of touch screens from models, and GM had to remove wireless charging features, fuel management systems in some new models.