EquitySet CEO Tony Zipparro sits down with Brad Smith to discuss investing in the tech sector amid recent volatility and expected rate cuts, providing his take on which stocks are the best artificial intelligence (AI) plays.
“If you dive into a sector like technology, it has been extremely popular [and] has had phenomenal returns over the last couple of years,” Zipparro says, adding that he likes to “narrow in” for a “more diversified approach” when investing in tech.
For those wanting to invest in the semiconductor space, Zipparro says, “Don’t go directly” on Nvidia (NVDA). “bide some time on Nvidia,” as it “could have massive price appreciation” or “massive price depreciation,” nodding to recent volatility in the chipmaker’s stock.
“If you’re looking at a hold…choose somebody in the middle like a Microsoft (MSFT),” given its strong fundamentals and ties to ChatGPT-maker OpenAI.
“In terms of a buy, go upstream if you want to be in technology and semis” and “pick ones that supply Intel, Nvidia,” and other chipmakers, Zipparro tells the Wealth! team, naming Applied Materials (AMAT) and Lam Research (LRCX). Chip component companies will share in AI chipmakers’ gains while being “less in the limelight if things go bad,” Zipparro says.
For more expert insight and the latest market action, click here to watch this full episode of Wealth!
This post was written by Naomi Buchanan.
Video Transcript
So when you think about the investment strategy right now and the the thesis around which companies should be by which companies should be held and which companies should be should be sold.
I mean, what are the characteristics of how people can think about that?
And are there specific ones, uh, in a buy hold sell with this cut implementation strategy, that’s gonna be a a larger cycle.
It’s not just gonna be one cut.
Hey, that’s it.
Absolutely.
And I think if if you dive into a sector right, technology been extremely popular, has had phenomenal returns right over the last couple of years.
Um, so if you kind of narrow in, I like the more diversified approach.
So if you wanna be in semis, I’d say don’t go directly.
So a cell might be, Hey, uh, buy some time on NVIDIA, right?
That could have massive price appreciation that could also have massive price depreciation.
Um, if you’re looking at a whole strong cash positions, right, choose somebody in the middle like a Microsoft open A I it’s getting all these funding.
You know, all these investments, Um, and even though kind of tied up in kind of the mag seven and the S and P. Um, still a great company.
Uh, and then in terms of a buy, right, go upstream.
If you wanna be in technology and semis like an Applied materials, right or a lamb research pick ones that supply intel and video right, that help to really build components and fabrication.
Um, because I think they’ll be less in the limelight if things go bad.
How can you identify whether or not a company has run too far ahead of its own valuation?
That’s the million dollar question, isn’t it?
Um, and that’s where I I think it’s It’s balancing the optics and perspective of the market, right?
I. I personally seen a lot of res run up to astronomical valuations, right to the prospect of rate cuts well, and that that’s where it’s funny.
At first it was kind of like OK, they’re just kind of going with the rest of the market, but then they kept going, going.
We’re talking 100 200 times PE S that they they really have never seen.
And now, sure, is there a potential that their profits are doubling and tripling?
I would say No, not to that extent.
And and that’s where it’s It’s interesting.
Kind of where the S and PS at near all time highs.
Right?
Right at this.
Maybe apex of where things are gonna happen.
And it’s by the rumours.
The news on the rate cut for some of these names.
Tony, Always a pleasure to have you here in studio with us, Tony Zarro Equity set CEO Joining us here on Yahoo Finance.
Thanks, Tony.