Lam Research, Oppo’s New Phone, Electric Utility Spending Support These Holdings
Let’s recap some items that reinforce our positive stance on several portfolio positions.
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As the market adjusts to Walmart’s WMT comments and the market's turbulence, let’s recap some items catching our attention that bring support for several TheStreet Pro Portfolio holdings.
Lam Research Upbeat on AI Demand for Semi-Cap Equipment
Yesterday Lam Research LRCX held its first analyst day in five years. That and the company’s position in the semi-cap market are reasons why we were interested in what it had to say.
Recent comments from Eaton ETN lay out the demand roadmap for data centers over the next several years. To that we can add the following from Lam: "AI data centers require high-performance accelerators, high bandwidth memory, and fast dense enterprise SSDs. And to build these devices, our customers are racing to implement new architectures and new integration approaches."
Lam went on to back industry forecasts calling for the chip industry to hit $1 trillion in size in the next several years, primarily due to AI, data center, IoT, and the growing array of connected devices. For context, that’s compared to $627.6 billion in 2024, and while we don’t necessarily pinpoint $1 trillion by 2030, it’s hard to argue with the direction.
We’ve talked about how increasing demand for chips would stress existing capacity and result in incremental capital spending. We’re already seeing that at Taiwan Semi TSM, and odds are others will follow. That along with re-shoring of capacity in the U.S., Europe, and elsewhere keeps us long-term bullish on shares of Applied Materials AMAT.
Oppo Enters the Folding Smartphone Market
While many have probably never heard of Chinese smartphone vendor Oppo, the company is the fourth largest in the market with, depending on the quarter, 8%-10% market share. Earlier today, Oppo announced its new flagship smartphone, the Find N5, a folding smartphone that when shut has a 6.62-inch display but opens up to an 8.12-inch tablet. With this device, Oppo joins a growing list of vendors, following Samsung and Huawei into the foldable market.
From our perspective, it’s another indication of growing organic light-emitting diode display demand on top of Apple AAPL migrating its entire smartphone lineup to the technology with yesterday’s as-expected announcement. It’s also the latest item reinforcing our long-term bullish outlook on Universal Display OLED.
Rising Utility Spending Keeps Us Bullish on Eaton
We’ve shared many a headline about data centers being a driving force behind power capacity shortages and we are now seeing that reflected in rising capital spending levels from electric utilities.
Dominion Energy D recently upped its five-year capital forecast from 2025 through 2029 to $50 billion, an increase of 16% from its prior guidance.
Duke Energy DUK boosted its five-year capital plan to $83 billion, a 12% increase compared to its prior guidance. Inside Duke’s forecast, 45% of that spending is targeted for grid investments.
American Electric Power AEP reiterated its $54 billion capital plan from this year through 2029.
In the coming days, we’ll hear from other public electric utilities, and we suspect they will be sharing similar upsizing of their capital spending plans. As they do this, we’ll be looking to round out the portfolio’s exposure to Eaton.
At the time of publication, TheStreet Pro Portfolio was long AMAT, AAPL, OLED and ETN.
