The Tech Basket of Stocks Is 'Incredibly Attractive,' Golub Says

Speakers

Jonathan Golub — Chief U.S. Equity Strategist (Implied Role based on context/history)

Summary

The speaker argues the "Tech Basket" is incredibly attractive because earnings are surging while multiples have compressed 20% relative to the broader market.
A specific contrarian call is made on Semiconductors (NVDA, AVGO); despite recent softness, the $650 billion CapEx spend by hyperscalers makes the sell-off unjustified.
The macro thesis pivots to the Midterm Elections: Republicans need to make consumers feel "heard" regarding affordability.
Consequently, policy will likely shift to prop up Financials (as the conduit for liquidity), Consumer Discretionary stocks, and the Housing sector (via GSE mortgage paper buying).

Trade Ideas

Ticker	Direction	Speaker	Thesis	Time
NVDA /AVGO	LONG	Jonathan Golub Chief US Equity Strategist, UBS	"If there's one group that kind of stands out, it's actually the semis... the Vagos [AVGO] and the in videos [NVDA]... massive CapEx intentions... 650 billion across four names, and yet we saw semis trade softer." The market is mispricing these assets based on short-term sentiment. The fundamental reality of $650B in committed CapEx spending guarantees revenue growth for these chipmakers, making the recent valuation compression a buying opportunity. Long Semiconductors due to the disconnect between price action and confirmed CapEx spend. Potential delays in hyperscaler spending or broader economic slowdown affecting tech budgets.	—
XLF /XLY /HOMEBUILDERS	LONG	Jonathan Golub Chief US Equity Strategist, UBS	"In order for Republicans to hold both houses of Congress... there's going to be a lot of effort to ease the burden on consumers... The conduit for that is the financials. You have to prop up the banking sector... Housing stocks, homebuilders like are going to be a focus." This is a political-economy trade. The speaker infers that to win the midterms, the government must artificially stimulate the economy to combat the "affordability" crisis. This requires utilizing banks to distribute liquidity and supporting the housing market (via GSEs buying paper) to lower costs, directly benefiting banks, builders, and consumer stocks. Long Banks, Consumer Discretionary, and Homebuilders as beneficiaries of pre-election fiscal/monetary support. Inflation re-accelerating prevents policy easing; Republicans fail to enact supportive measures.	2:42
IGV /XLK	LONG	Jonathan Golub Chief US Equity Strategist, UBS	"If you look at the tech basket relative to the rest of the market, it's earnings are on fire... and it's multiples are down 20% versus the rest of the market... there's also a bunch of things in the software space that are dislocated near-term." Tech is historically cheap relative to its own growth metrics. The "dislocation" in software suggests an oversold condition that will revert to the mean as earnings continue to outperform the broader S&P 500. Long Broad Tech and Software. Higher for longer interest rates compressing long-duration asset valuations.	—