A Goldman Sachs technology specialist thinks one sector of the market looks particularly exciting amid historic stock gains.
Peter Callahan, specialist in the telecom sector, say in a new interview that U.S. Internet stocks have lagged behind software this year and haven’t received enough attention.
“There are ongoing debates about funding sources, about ongoing investment cycles, about consumer health, and of course about where AI in the consumer world will go in the coming years. But lately you’re starting to see a little more innovation from the product side at US internet companies connected to AI.
The temperature for consumers seems to be dropping now that oil prices have reached their peaks. And so given that background and cleaner positioning, I’ll be keeping an eye on the US internet sector from here.”
Callahan also outlines what investors should look for when looking at semiconductor stocks, which are having their best year in decades.
“I think it’s been a great start to the year for semiconductors. I think any time a group goes up 80% like it has in five months, there’s obviously some kind of momentum dynamic going on. You’re going too far, too fast.”
You have all those kinds of things that matter in the short term. But I think in the medium term, earnings revisions really matter, right? And as long as you get earnings revisions for this group, which helps keep the multiples on track, I think investors will be comfortable adding to this group with pullbacks or loss of momentum or different types of positioning pressures that can naturally arise when you have moves like that.
So I think ultimately we just have to continue to monitor earnings growth and I will do my best to keep this group informed.”
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