SMH: Thank DeepSeek For Great Buying Opportunity - Breakout Is Almost Here

Juxtaposed Ideas
13.87K Followers
(9min)

Summary

  • SMH's sideways trading since June 2024 and the bullish support at the worst of the DeepSeek correction have been a boon indeed.
  • This is because the robust multi-year AI spending trends are likely to trigger a break out in 2025, assuming that NVDA offers a promising FY2026 guidance.
  • Otherwise, AVGO is likely to be a robust growth driver, thanks to the hyperscalers' increased demand for custom ASICs given the improved cost to performance ratio.
  • This is on top of TSM's increased manufacturing capacity from Q4'24 onwards, along with numerous data center REITs' capacity coming online in 2025.
  • As a result, we are finally upgrading SMH to a Buy, significantly aided by the reasonable P/E ratios.

Stock market crash

SMH Is Finally Attractively Valued After The Sideways Trading Since June 2024

We previously covered VanEck Semiconductor ETF (NASDAQ:SMH) in October 2024, discussing why the ETF's painful pullback in July/ August 2024 had occurred as expected, with the ETF nearly losing

This article was written by

13.87K Followers
I am a full-time analyst interested in a wide range of stocks. With my unique insights and knowledge, I hope to provide other investors with a contrasting view of my portfolio, given my particular background.If you have any questions, feel free to reach out to me via a direct message on Seeking Alpha or leave a comment on one of my articles.

Analyst’s Disclosure:I/we have a beneficial long position in the shares of SMH, NVDA, TSM, AVGO, GOOG, MSFT, META, AMZN either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

The analysis is provided exclusively for informational purposes and should not be considered professional investment advice. Before investing, please conduct personal in-depth research and utmost due diligence, as there are many risks associated with the trade, including capital loss.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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