A Goldman Sachs tech specialist thinks one sector of the market looks particularly exciting amid historic stock gains.
Peter Callahan, a telecom sector specialist, says in a new interview that US internet stocks have lagged software this year and haven’t received enough attention.
“There are ongoing debates about sources of funds, about ongoing investment cycles, about the health of the consumer, and of course, where AI in the consumer world goes over the next couple of years. But as of late, you’re starting to see a little bit more innovation from the product side on US internet companies tied to AI.
The temperature on the consumer seems to be coming down as oil prices have reset off the highs. And so given that backdrop and cleaner positioning, I’ll be watching the US internet sector from here.”
Callahan also outlines what investors should track when looking at semiconductor stocks, which are having their best year in decades.
“I think for semiconductors, listen, it’s been a great start to the year. I think any time a group’s up 80% like it is in five months, there’s of course– you have sort of these momentum dynamics. You have too far, too fast.
You have all that type of stuff that kind of matters over the short term. But I think over the medium term, what really matters is earnings revisions, right? And as long as you are getting earnings revisions for this group, which helps keep multiples in track, I think investors will be comfortable adding to this group on pullbacks or momentum unwinds or different pockets of positioning pressures that can show up, of course, when you have moves like this.
So I think at the end of the day, just keep tracking the earnings growth and I’ll do my best to keep this group informed.”
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