Supply chain chaos, chip shortage could go through 2023: Paul Meeks
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It can be more difficult to find a car or a phone that works better.
Paul Meeks, an investor warns that Wall Street underestimates the shortage of semiconductors. It will take many years to resolve, he believes.
The Independent Solutions Wealth Management portfolio manager said that “this might be a problem which persists deep into 2023.”Trading Nation“Friday.
Meeks is well-known for managing Merrill Lynch’s world-leading technology fund during the dotcom bubble. He expects to suffer a terrible fallout.
Some of these companies won’t be able ship units. He said that if they are unable to ship units they could disappoint their earnings. They could drop because their stocks are so high. They could not go down, but they might go down significantly.
Corporate America and the consumers are trying to deal with this. supply chain frustrationSemi stocks are rising. These are the VanEck Vectors Semiconductor ETFOver the past six-months,, which measures the group, increased by 35%
Meeks overweighted chipmakers in early June 2020 — months before supply shortages made front page news. He believes stocks will continue to grow.
He said, “I like also semiconductor capital equipment.” But you need to be sharpshooter, because you not only have to decide if the products are in favor of others… but you also need to find out who best executes their supply chains.”
Meeks lists Broadcom Microchip TechnologyThese are examples of businesses that have successfully adapt their orders processes before the devastation of Covid-19.
Although Meeks has positive views on semiconductors he’s worried about FAANGParticularly Apple.
“About half their business is still derived from the iPhone,” Meeks said, adding that he also teaches finance in The Citadel. They have a huge shortage which has led to many losses. billions of dollars of revenue last quarter.”
He is concerned about the escalating issues. this holiday seasonThere are many disappointed customers who don’t receive their purchases in time.
There isn’t any relief
“It’s an unfortunate situation and there’s no relief,” Meeks said. “It will also affect the top and bottom line of some vendors selling these hot Christmas products.”
Meeks views GoogleAs the only FAANG stockHe said he’d consider purchasing with current money. He mentions the positive effects of digital ads rebound.
“And, [it]It doesn’t have Facebook“‘s regulatory issues,” added he. The rest of FAANGs I could hold, if they were available. They wouldn’t be bought with cash.
Also, Meeks would stick with Microsoft.
“It is obviously expensive, particularly for a business that has not traded at these types of valuation multiples,” Meeks said. But they are doing the right thing. Amazingly handled.”
Microsoft shares rose 15% and 51% respectively in the month of March.
Disclosure: Meeks holds Apple, Microsoft Alphabet and Meta Platforms.
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