This week's Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking tech - particularly "new paradigm" tech - with Mark Hibben of Rethink Technology.
Before that, the hosts chat about the rapidly developing coronavirus situation. What's sure to be a very sizable economic slowdown - in China, of course, but clearly also spreading elsewhere - can no longer be denied. That's bringing Fed rate cuts in 2020 back into play, and while Fed speakers are playing it cool for now, it seems just a matter of time before they signal their readiness to move.
While market averages (at least until Monday) have mostly brushed off these concerns, Task takes a look at the stocks other than mega-caps Microsoft, Apple, Google, and Amazon, and popular high-flyers like Tesla and Virgin Galactic. What he finds is that the bear market is well underway for more than half of the Nasdaq.
Hibben is keeping his eye on the coronavirus as well. His base case, for now, is that this is a one quarter event. Even if stretches to two quarters - i.e., a real recession - Hibben would welcome the opportunity to buy the dip in favored names like Apple (AAPL), Nvidia (NVDA), TSCM (TSM), and Microsoft (MSFT).
What Hibben calls new paradigm semiconductor companies (mostly Apple, but others as well) are those that design most of the processors put into their products. At first derided as a Steve Jobs folly, Hibben argues that the move to make custom chips has been perhaps the major reason for the massive profits at Apple over the last decade. Apple's chief competitors, Samsung [[(SSNLF), (SSNNF)]] and Huawei have now followed suit.
Is Amazon (AMZN) new paradigm? Yes, says Hibben, who argues that the most important server processor introduced last year did not come from either AMD (AMD) or Intel (INTC), but from Amazon (AMZN), which in December announced the Graviton 2 based on ARM architecture. It's claiming 40% higher price performance than options from either AMD- or Intel-based options.
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