One Goldman Sachs technology specialist believes one sector of the market looks particularly exciting amid historic stock gains.
Peter Callaghan, communications sector specialist, He says In a new interview, US Internet stocks lagged software this year and did not receive enough attention.
“There are ongoing discussions about where the money is coming from, about ongoing investment cycles, about consumer health, and of course, where AI is going to go in the consumer world over the next couple of years. But recently, you’re starting to see more innovation on the product side in US internet companies related to AI.
The consumer temperature appears to be dropping as oil prices rise from their highs. Given this backdrop and cleaner location, I’ll be keeping an eye on the US internet sector from here.
Callahan also explains 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 the group is up 80% like it is in five months, there’s of course — you have kind of these momentum dynamics. You’ve got it going very far, very fast.
You have all these kind of things that matter to you in the short term. But I think in the medium term, what really matters is the earnings revision, right? And as long as you’re getting earnings revisions to this group, which helps keep multiples on track, I think investors will be comfortable adding to this group on pullbacks or momentum relaxations or different pockets of positioning pressures that can arise, of course, when you have such moves.
So I think at the end of the day, just keep an eye on the earnings growth and I will do my best to keep this group informed.”
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