Kim Bolton, president and portfolio manager, Black Swan Dexteritas Inc.

FOCUS: Technology stocks 

MARKET OUTLOOK:

The S&P 500 Index notched its thirtieth record close of 2024, as of June 17 and is now up a whopping 15 per cent. The Nasdaq 100 Composite has surged 18.2 per cent only six months into the year. Raising corporate profits, cooling inflation, an upcoming U.S. Federal Reserve easing cycle, historically low market volatility, a likely soft landing, and the notable AI rally have resulted in an additional $5.5 trillion in U.S. stock market capitalization. Analysts keep moving up their price targets as bullish energy takes over the markets.

It’s pretty clear that money is moving off of the sidelines – but will it last? Those concerned about concentration risk point to the above-average share mega caps, and should things go south in the tech sector it could weigh on the broader markets. It’s a legitimate worry, as the Magnificent Seven represents two-thirds of the gains for the S&P 500, but others point to the successful reasons behind that trade and say to be greedy when others are fearful. Even if those stocks are stretched, there may be a lot of room to run for many other companies to sustain the rally. For example, AI will kick off a data center capex cycle that will dwarf general-purpose data center capex in the coming years, plus as software becomes ubiquitous, the AI application and intelligence layers will enable first adopters to drive both revenue and margin expansion.

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TOP PICKS:

Infineon Technologies (IFNNY ADR)

Infineon is a semiconductor device manufacturer which operates through four main segments including automotive, green industrial power, power and sensor systems and connected secure systems.

Infineon remains a key digital enabler in automated driving. Infineon continues to expect further increases in the level of semis content per car, driven by the increased adoption of automotive digitalisation, such as autonomous driving technologies. While the structural shift in drivetrain towards electrification is already progressing well, the company sees automation as the next large secular driver of semis content in vehicles 

Microchip Technology (MCHP NASD)

Microchip Technology Incorporated develops, manufactures and sells smart, connected and secure embedded control solutions across the Americas, Europe, and Asia. The company offers a wide range of microcontrollers and microprocessors, analog and interface products, and FPGA products and services. 

ON Semiconductor (ON NASD)  

ON Semiconductor Corporation (onsemi) offers a range of intelligent power and sensing technologies. Key products include power management solutions, sensors, and custom devices for automotive, industrial, cloud, medical, and IoT applications. Its portfolio features silicon carbide (SiC) power solutions, advanced imaging technologies, and energy-efficient power management systems for electric vehicles, industrial automation, and renewable energy. 

Recently, onsemi announced the introduction of its next-generation analog and mixed-signal platform to enhance its intelligent power and sensing solutions. It continues to drive innovation with record growth in its silicon carbide revenue and expanding applications in the automotive sector.

PAST PICKS: June 7th, 2023

Analog Devices (ADI NASD)

• Then: US$180.37
• Now: US$235.38
• Return: 30%
• Total Return: 33%

Dell Technologies (DELL NYSE)

• Then: US$47.66
• Now: US$149.15
• Return: 213%
• Total Return: 220%

Monday.com (MNDY NASD)

• Then: US$167.54
• Now: US$225.08
• Return: 34%
• Total Return: 34%

Total Return Average: 96%