Darren Sissons KLA-Tencor KLAC-Q BUY ON WEAKNESS Aug 06, 2024

A great way to play the AI chip gold rush. 30% free cash flow, 44% return on invested capital, double the industry average.

An overlooked semis name and trades at a reasonable PE. 

Equipment suppliers for semiconductor industry. Older school, cheaper than cutting-edge lithography companies. 12-month price target for LRCX of $1070, up 35% in last 100 days, great company, seems very competitive. Closest comparison would be to KLA.

The semis space has done very well. However, if China builds capacity in this space, then capacity will be lost elsewhere. The market is not considering this. Also, shares of semis are at all-time highs. Don't buy. It's a recipe for disaster. Semis are a great space, but wait for a better entry point.

He prefers LRCX and ASML. He'd take profit on half and use proceeds to buy into ASML, as it's really rolled over because of weaker guidance.

Great opportunity to pick up 4 pillars. MU on the manufacturing, TSM for the foundry, LRCX or KLAC or ASML as the equipment suppliers, NVDA is a gift down here as a designer. And (he can't believe he's going to say this) even INTC; come 2025, it will be competitive with NVDA.

One of the things his team's looking at right now is that it seems some of the regulations surrounding the semiconductor industry will be reduced (specifically China, but other countries as well). That could mean an expanded market for the semi manufacturing equipment companies, such as KLAC. AVGO has also been a strong performer, and he owns some NVDA. Those two names have strong relative price performance, are economically sensitive, cyclical, and have pricing power.