Kunst: Tech has done the best on the way up, which means you have a hard time on the way down
Speakers
Sarah Kunst
— Cleo Capital Founder
Dan Ives
— Managing Director, Wedbush Securities
Summary
Sarah Kunst of Cleo Capital discusses why tech is under pressure as trade tensions with Europe escalate. She argues tech's prior leadership makes it vulnerable on the downside, and that EU retaliation could extend beyond goods to tech services. She is selective on the dip, avoiding high-P/E names like Tesla, Intel, and Palantir while favoring Taiwan Semiconductor and higher-tech chip hardware; she also flags demand risk for Nvidia and finds Samsung interesting.
- Tech is under pressure after leading the market higher.
- EU trade retaliation could expand to tech services via the anti-coercion instrument.
- Kunst avoids high-P/E tech names Tesla, Intel, and Palantir on the dip.
- She favors Taiwan Semiconductor and higher-tech chip hardware names.
- Samsung is called interesting among Korean chip names.
- Nvidia's main risk is sustaining AI chip demand if AI business models disappoint.
- Nvidia's management is viewed as skilled at navigating US-China tensions.
Ideas
Tech vulnerable after leading market higher
Tech has led on the way up, which makes it vulnerable on the way down; trade tensions now extend beyond physical goods, and EU retaliation threats are making investors nervous and prompting profit-taking. She sees broad tech as a setup for further pressure, while stressing that the impact depends on the specific company.
Avoid high-P/E tech on the dip
She would not buy the dip in tech names with extremely high P/E ratios and valuations far ahead of fundamentals, specifically Tesla, Intel, and Palantir. Valuation risk makes them unattractive even after a selloff.
Like Taiwan Semiconductor on TSM earnings
She likes Taiwan Semiconductor as a better-priced, higher-tech chip hardware name. TSM's earnings gave confidence in the AI trade, and she prefers it to expensive high-multiple tech and legacy chip names.
Prefer higher-tech chip hardware names
For broader chip names, she prefers higher-tech, better-priced chip hardware companies over expensive high-multiple tech and legacy names like Intel; TSM earnings support the AI trade, and old boring chip hardware is worth a look.
Nvidia demand risk despite China savvy
She believes Jensen Huang can navigate US-China tensions and find a way, but the bigger risk for Nvidia is whether chip demand stays as high as it has been, especially as underlying AI companies struggle to find real business models.
Samsung interesting among higher-tech chips
She finds Samsung interesting among higher-tech chip names, while she is less inspired by some other Korean chip names and legacy names like Intel.
