Aaron Kennon

The memory semiconductor sector (SK Hynix, Samsung, Micron) is trading at mid-to-high single-digit multiples, which historically has been a buying opportunity because earnings are moving sharply higher. The AI-driven semiconductor buildout cycle appears to be in the second or third inning, not the eighth or ninth, suggesting further significant growth ahead. This cycle may be longer and peak at a higher level than prior cycles due to the pervasive role of semiconductors in the economy.

The memory semiconductor sector (SK Hynix, Samsung, Micron) is trading at mid-to-high single-digit multiples, which historically has been a buying opportunity because earnings are moving sharply higher. The AI-driven semiconductor buildout cycle appears to be in the second or third inning, not the eighth or ninth, suggesting further significant growth ahead. This cycle may be longer and peak at a higher level than prior cycles due to the pervasive role of semiconductors in the economy.

The memory semiconductor sector (SK Hynix, Samsung, Micron) is trading at mid-to-high single-digit multiples, which historically has been a buying opportunity because earnings are moving sharply higher. The AI-driven semiconductor buildout cycle appears to be in the second or third inning, not the eighth or ninth, suggesting further significant growth ahead. This cycle may be longer and peak at a higher level than prior cycles due to the pervasive role of semiconductors in the economy.

Secular growth companies outside of the main AI and SaaS themes are attractive. Their price-to-earnings multiples have compressed, yet they are still posting strong 10-20% annualized growth. These opportunities exist across various sectors, including healthcare, technology, and consumer discretionary. For example, Intuitive Surgical just had a very strong report and is effectively leveraging AI, positioning it well.

Year-to-date, the S&P 500 (market cap) is flat/up slightly, but the Equal Weight S&P (RSP) is up ~6-7% and the Russell 2000 is up >7%. We are witnessing a "valuation normalization." Investors are rotating out of expensive Mag-7 names into the "average stock" which trades at a discount. The "Big Beautiful Bill" (stimulus) and onshoring favor industrials and domestic small caps. LONG Equal Weight S&P (RSP) and Small Caps (IWM) over the Cap-Weighted S&P 500 (SPY). A recession hits small caps harder than cash-rich tech monopolies.

Year-to-date, the S&P 500 (market cap) is flat/up slightly, but the Equal Weight S&P (RSP) is up ~6-7% and the Russell 2000 is up >7%. We are witnessing a "valuation normalization." Investors are rotating out of expensive Mag-7 names into the "average stock" which trades at a discount. The "Big Beautiful Bill" (stimulus) and onshoring favor industrials and domestic small caps. LONG Equal Weight S&P (RSP) and Small Caps (IWM) over the Cap-Weighted S&P 500 (SPY). A recession hits small caps harder than cash-rich tech monopolies.

Year-to-date, the S&P 500 (market cap) is flat/up slightly, but the Equal Weight S&P (RSP) is up ~6-7% and the Russell 2000 is up >7%. We are witnessing a "valuation normalization." Investors are rotating out of expensive Mag-7 names into the "average stock" which trades at a discount. The "Big Beautiful Bill" (stimulus) and onshoring favor industrials and domestic small caps. LONG Equal Weight S&P (RSP) and Small Caps (IWM) over the Cap-Weighted S&P 500 (SPY). A recession hits small caps harder than cash-rich tech monopolies.