Bloomberg Surveillance · Monday, July 13, 2026
A recent significant correction in chip stocks, following a substantial run-up, is viewed as an opportunity for long-term investors. The analyst posits that the market is moving from a cyclical growth model to a growth compounding model due to a more controlled oligopoly structure and long-term contracts with built-in price increases.
“The spot market in chips ship stocks is being set in Korea. These are folks that are using the market as a gambling mechanism. They're playing short term movements, they're playing charts and not really look at fundamentals. So we had a huge move up five x. Now we're had a thirty percent correction, a long term investor looks at that and says, Okay, the first move up in these chip stocks was an earnings explosion. We've seen that. The next move now is a revaluation because now we're down to three manufacturers we had, which is a really well controlled oligopoly. Adding caps is very very expensive.”
“So that is a discipline in itself. And what's happening is and we're seeing it. We've been expecting this. The chip manufacturers are now getting long term contracts with built in price increases. That's changing them from being cyclical growth companies to growth compounders. There's still priced like cyclical company. So somewhere out there is a revaluation in these stocks.”
“You think they should probably over the next five years trade up closer to a market multiple at least a fifteen times.”