Independent Wealth Solutions Management Paul Meeks joins Yahoo Finance Live to discuss Apple's $3 trillion market cap, Nvidia's ARM deal, and other tech stocks.
- Welcome back to Yahoo Finance Live. We are seeing shares of Apple pulling back a bit here, down more than 1%, but not before notching a new high in the session. The tech giant became the first company to touch that $3 trillion mark in market cap yesterday. But our next guest says there's another big tech trade you should keep your eye on. Let's bring in Paul Meeks, independent Wealth Solutions Management.
Paul, we're going to get to that big pick that you've been eyeing for a while, but let me just get your thoughts on Apple, how quickly it's moved up to that $3 trillion milestone, and what it ultimately means. Is it just a number or does this kind of mark a new chapter in the larger tech trade?
PAUL MEEKS: I think it's just a number. And I think that at $3 trillion market cap, even though Apple has been a iconic American tech company forever and ever-- so impressive what they've done in the past-- I think it's very expensive know as a tech investor, and I manage a lot of tech money for folks. You know, I have to own it, right? It's a big piece of my benchmark. But among the tech names, large, medium, and small, it's not even on my best list. I think the stock is overpriced right now and significantly so.
- Yeah, what's interesting is I guess, you know, you're kind of voicing the same thing that we heard from a friend of the show, Dan Niles, who runs Satori fund, also saying Apple is overvalued. It's come up 20% since then, obviously, and that's just the last two months. But he also likes Google and likes maybe the longer run-- runway there in terms of what could happen in 2022. So I mean, would you agree maybe that that's the better name if you're looking for returns this year, and I guess, why?
PAUL MEEKS: Yeah. So among the FAANGs, and with the FAANGs, I include Microsoft, I probably would go with Alphabet/Google over the others. And even beyond the FAANGs, I think some of the semiconductor and semiconductor capital equipment names might even be better positioned. And so I don't necessarily feel beholden to the FAANGs.
Now within the FAANGs, Alphabet, you know, with the resurgence of the US economy and economies around the world after Omicron or whatever variant comes next, you do have a big resumption in growth in digital advertising. And of course, Google-- it's Google platform, is by far and away the winner there. And I also think they're doing enough things in their other R&D that can all be big movers. And when I say big movers, businesses that have over a billion in annual revenues and big operating profit in cash flow. So I do like the relative valuation of Alphabet. Even though it outperformed last year, I expect it to continue to outperform this next year. And I do think that they have probably the clearest path to long-term growth than almost any of the other things.
- Paul, let's talk about one tech name that you are particularly bullish on, that is NVIDIA. Video, we're seeing the shares down today more than 4%, but we've certainly seen this company post really strong earnings, even the face-- in the face of uncertainty around that deal with Arm. How big of a weight do you think the uncertainty around that will continue to be on the stock? Or you know, is it really better here to-- to kind of look at NVIDIA beyond this deal, given that it certainly doesn't look like regulators are going to give it the green light?
PAUL MEEKS: Excellent question. So you know, first of all, NVIDIA's down a lot today because it was up a lot last year and in recent sessions. And of course, the action today with the growth names like the technology leaders going down is because the yield on the US 10-year is on the rise. For NVIDIA, you know, they are essentially laser beam focused on all the key themes going forward, you know, whether it be AI or VR or Metaverse-- whatever that ends up being. And so all of those themes have a voracious demand for more computing power, and these guys are the leader. And so I think it's actually a decent opportunity as rates rise in the near term and these tech stocks get hit to swoop in to NVIDIA.
Now your question about the Arm deal. I always thought that it was a very expensive deal, too expensive to do. I also thought that it would be tough to integrate, big deals always are. And I always thought that there was a very good chance that regulators, not just in the US, but chiefly abroad, particularly the Chinese, would not bless the deal. And so I think that's coming to fruition. And I think what happens is NVIDIA escaped a bullet. They're still going to be able to do a wonderful licensing deal with Arm and get all the financial benefits, but they do not need to integrate or pay for a mega deal. So at the end of the day, I think this is going to be just fine.
- Yeah, I'm particularly also-- I mean, we heard from the CEO of NVIDIA on our air kind of talking about that real hard lean into the Metaverse and really trying to build out, I guess, what they will be powering in not only next year but decades to come. And if you are bullish on that thesis, I guess NVIDIA is not the only play. You also like Micron. And you know, these are names that you and your clients-- talk to me about why Micron might also be a play and whether or not investors might be good to just play the ETFs tied to the semiconductor space. I mean, what's the best way to really play it this year?
PAUL MEEKS: Well, the nice thing about these very same themes is they also have a voracious appetite for storage. And of course, whether it be DRAM or NAND flash, there is a worldwide oligopoly-- not a monopoly, but an oligopoly in storage, with the major US played being Micron. And the reason I like Micron versus say the Philadelphia Semiconductor Index-- so instead of going diverse, go concentrated-- is because Micron is doing so well fundamentally, and its fundamentals are accelerating, and the stock is super cheap. It's only trading at 9 times this year's estimate, which I bet is going to be low. And so I'd buy Micron, because I think it's going to outperform semis. And I'd buy semis because I think they're going to outperform tech.