Pro: ‘we could be at the precipice of a super cycle in semiconductor demand’
The United States doesn’t want to depend on a country with high geopolitical tensions like Taiwan for semiconductors, says Goldman Sachs’ Katie Koch.
Koch’s remarks on CNBC’s ‘Squawk Box’Copy link to section
Koch is strongly bullish on semiconductors as she’s convinced the U.S. will commit to building capacity in this space. On CNBC’s “Squawk Box”, she said:
The CEOs of the U.S. technology companies don’t want to be dependent on getting ships from another corner for the world. They’ll build for capacity in the semiconductor space. We could be at the precipice for what’s a super cycle in semi-demand.
Within this space, one name in particular that pops out to her is a California-based semiconductor equipment manufacturer, KLA Corporation (NASDAQ: KLAC), with the stock up more than 50% year-to-date.
Despite signs of improvement, Koch doesn’t expect supply issues to resolve completely in 2022 that might accelerate the push to build semiconductor capacity and send KLAC up even further.
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Look for opportunities in the small-cap spaceCopy link to section
Other than that, Koch recommends looking for opportunity in the “overlooked” small-cap space that’s trailing the S&P 500 by 10% this year. Growth stocks on the Russell 2000 look especially promising to her.
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Small-cap growth is underperforming small-cap value by 20% this year. So, opportunity to get exposure to companies with great U.S. domestic exposure. Their valuations are more attractive than they’ve been in a long time in small-cap. You’re paid a 10% premium versus a 37% premium.
The small-cap index is down nearly 7.0% since last Wednesday as investors pulled back on fears of inflation and the new COVID variant of concern. Workiva Inc – an Iowa-based SaaS company, is one of her top picks in the small-cap space.