Recently featured on CNBC TV, Paul Meeks shares his optimistic outlook on technology giants like Nvidia and Micron. Despite recent market turbulence, Meeks believes Nvidia's growth prospects remain strong, identifying current conditions as a potential buying opportunity. He explains that although fears have gripped the semiconductor sector, Nvidia’s future looks incredibly promising, supported by robust earnings projections. Watch the video for full details.
Transcription:
CNBC
Worst day since September 2022, dragged lower by everything from the mag seven to semiconductor stocks. It was really the semiconductor stocks that took it on the nose. Joining us right now with his outlook for the sector and his squawk picks is Paul Meeks. He's harvest portfolio management CIO. And Paul, how are you feeling about this in the aftermath?
Paul Meeks
So what I think is going to happen is we'll have a repeat of what happened only a month ago. And so if you take a look at the bellwether stock Nvidia, a month ago it did close at about 98.99. Even got lower than that in early August in the intraday move. And so we'll see how it goes. I imagine that we'll retest, and if we successfully retest that, then I probably go in and become a aggressive buyer again, because in the last month or so, we had their quarterly earnings report and we had some other data and of course the company is going to slow a little bit, but it's still growing at a really good rate. The outlook is very bright and I think the only thing that's really new that changes the thesis, I don't really think it changes it at all, is the subpoena that they've received from the Department of Justice, which is typical in the technology sector when angry competitors start complaining to the government. So I actually think it's a pretty good buying opportunity after, with the smoke clears here, and I hope it's fairly soon, today it looks like the stock is going to open up at 106.
Paul Meeks
That means it's trading at 29 times next year's earnings for 42% earnings growth, which is a nice discount, whereas the S and P 500 is trading at 20 plus times earnings. And it's probably trading at a peg ratio of about three times. And the pEG ratio for Nvidia is about 60, 70%. So I actually think it's quite attractive.
CNBC
That's what I'm trying to figure. You would buy it today or you would wait, you said, till the smoke clears or until it tests that, the low from before, because, I mean, if you're, if you're really bullish on it, it's 10% cheaper than it was yesterday.
Paul Meeks
Yeah. Yeah. So this is what I would do. This is what I am doing for clients where I hold it. I've held it for years, so I'm not adding to it. But if fresh money comes in today, yeah, I think you have to get started. You can't necessarily worry in the short term where it goes, but I'm very comfortable 110% comfortable that if you bought it today, a year from now, you'd feel great. Of course, in the near term it could go lower, but that's always the risk.
CNBC
Sure. You're also really bullish on Micron. Why?
Paul Meeks
Yeah, I like Micron. Micron and only two other companies the South Koreans dominate. And high bandwidth memory. And high bandwidth memory is absolutely a key building block for AI infrastructure. They don't have their quarterly announcement until the end of September. So I'm always a little bit wary, particularly in this environment, of buying a stock ahead of company news, because what we've seen in the last couple of weeks and months is companies report good news on their quarter, they report pretty positive guidance, and the stocks still go down. It's just a squirrelly market right now. But I like micronous very much, and those would probably be my two Nvidia and Micron. Key semiconductor plays.