00:00Lisa Shannon of Morgan Stanley writing, now is the time to evaluate where true secular growth may be on relative
00:06sale.
00:06Continue to reduce overbought semiconductors, favoring AI build-out diffusion over the most scarcity-priced epicenters.
00:13Lisa joins us now for more. Lisa, good morning.
00:15Good morning.
00:16That first line is really interesting. True secular growth.
00:19Just how cyclical do you think parts of this market actually are?
00:22I think that the entire market is one trade, and I think right now we're in the boom part of
00:29the trade, which means the entire thing is cyclical.
00:34And I would go further than that, that one of the things we're pointing out to folks is, particularly in
00:41the semiconductor trade, what portion of it is price?
00:44So not only do you have to think about what are normalized earnings here, what is the fundamental underlying secular
00:51growth rate here,
00:52so how much volume goes away and how much pricing power goes away, because there's a lot of pricing power
00:59that folks are mistaking for productivity.
01:02Because pricing right now for the semis are flowing right to the bottom line, and folks are looking at those
01:07margins and saying,
01:08oh my God, increase the long-run forecasts. And our view is so much is not sustainable.
01:15Do you think Broadcom then was just a crack or a red flag?
01:20Uh, probably a red flag. It is, it is, it's just a reminder that these businesses are really, really hard.
01:29They're capital intensive. And, you know, you can't, you know, you may be able to see your order book,
01:34but, you know, we're seeing, uh, you know, uh, all kinds of pressure on the inputs, right? Commodity inputs.
01:41We're seeing global commodity inflation. Um, so I, I, I think, I think it's a warning flag.
01:48We're seeing global commodity inflation.ies.
01:48We're seeing global commodity inflation.ies.
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