Resonate Wealth Partners CIO Alex Guiliano and TPW Advisory Founder Jay Pelosky reveal why the recent sell-off in semiconductor stocks is actually a massive fake-out.
I wrote uh uh uh a piece on Friday called the Black Cat market, arguing that the the buyers, investors are superstitious, right? They don't believe the sustainability of the earnings story.
Right.
Right. And so you have these semi chip makers and the memory stocks in particular trading at ridiculous forward PEs.
Right.
The the the South Korean memory stocks, South Korea itself is trading at an all-time low on a forward PE basis. It's trading at like five times forward earnings. So, to me the opportunity is right now in the tech space.
Right.
Uh these things uh the market short-term, the rental for uh GPUs is showing that short-term demand is very strong. And then long-term, you have, as you say, TSMC, ASML,
ASML came out last week, said they can't keep up with demand through 2028.
Yes. Yes. But this is my point. They are telling you that they are sold out for the next two years. And the market doesn't buy that either.
Right.
Right. So at some point it's going to be like, okay, you know, we were wrong and and we're going to own this stuff. And so you have an opportunity where the PE in the in the semi space and in the tech space in general is at three to five year lows. NVIDIA is selling at a 10-year low on a forward PE basis.
Right.
Then you have the banks, as Alex said, completely agree there. And then you also have small caps.
Right.
Because small caps have also had one of the worst runs in years over the last six weeks.
Well, because because rates have ticked higher. Right. Much more sensitive. Look, I still think we're in the very, very early stages of this AI. I don't even think we've started the game yet. I think we're still in the batting cages right in terms of where we are in in this AI story.
Yeah, but I think the big thing is we're facing the evolution period now where like, okay, you know, like Jay mentioned, like people aren't trusting the earnings and the potential growth that's there. And I think you're going to start seeing that dispersion where people are going to start trusting and leaning into the ones that they trust and the ones that aren't are going to face much more challenges proving what they're doing.
Well, and that's always been but we're going to see now as we move through the earnings season because like I said, we already had we had Taiwan semi. Tomorrow you're going to get SpaceX. Tomorrow night after the bell. I'm really curious what they, you know, what happens with SpaceX. Um,
And then you have the big hyperscalers. You got Meta on Wednesday and and the big hyperscalers next week. And I think, you know, people are going to have to kind of come to grips with the reality of a very solid near term and medium term, you know, demand outlook.
And then and then
Right.
As you say, we have just beginning the agentic uh AI economy and we haven't even started the physical AI economy. And so all of it, I mean, to me, it's seems quite clear that demand is going to be robust for the next several years and we want to participate in that. You're getting a chance, in my view, a pretty much unique chance to buy the best earnings path in modern history at the cheapest forward multiple.
Right.
I mean.
Right.
