The now repulsive obsession with Nvidia -- hey, I can say that, as I have been flogging this horse since the $30S -- has blinded people to the semis that can provide the next leg higher. Yet CES, where Nvidia made a deserved splash, showcased a lot of technology that will rely on many semi companies, not just that of the stock that rallied 220% last year and finished the year on the down side of a ridiculous mark-up spike that, if anything, should be investigated by the government as a way to enhance the performance of some aggressive growth funds.
Yesterday we had a piece of research from Credit Suisse that talked about Texas Instruments and how it is built into a lot of the devices that matter. The incredibly bullish report put estimates at substantially higher levels than its peers. If you believe, for example, in the iPhone 8 SuperCycle, the description of what Morgan Stanley's Katy Huberty thinks awaits us, then you should be buying Texas Instruments.
When I see the autonomous cars, I think not just about Nvidia; I think about Analog Devices, which has made such a commitment to this technology and can benefit just as much from this line of business as a percentage of its overall panoply of product lines. When ADI appeared on Mad Money recently, I was reminded about how positive this Linear Tech acquisition will be and how numbers may be too low there, too. What a combination!
Nvidia may be the king of the autonomous auto, but it also has a substantial gaming division. So does AMD and, while close second shouldn't accord it a premium to Nvidia, it does deserve to power still higher. I think that the stock's still overlooked because people are concerned about the balance sheet. I think that was a solved issue by that last refinancing.
Broadcom has both cellphone and next generation, G5 dominance. When we keep hearing of all of these devices we watch programming on, we should think how G5 will make it faster and better. A year ago, Verizon's (VZ) Lowell McAdam told me to look out for G5. When the CEO goes on record talking about fast technology and it is so easily identified with one company, why insist on endlessly buying Nvidia?
Does anyone remember the better-than-expected quarter from Micron? I totally get the aversion to a company that has been boom and bust endlessly and always will be, despite the diversion into Flash. But when it is boom it is serious boom, and we are in the second quarter of serious boom.
Then there's Western Digital, which branded into flash -- remember flash is still tight -- but has a dominant position in the data center, still one area we adore Nvidia for. The difference? Western Digital sells at 10x earnings. It's absurd, especially when one considers it sells at a fourth the price to earnings multiple of the anointed one.
I know people will conclude I don't love Nvidia. Quite wrong: its machine-learning, artificial intelligence line of chips alone should make it trade at a premium to the group. But to ignore the changes of these companies and their strong books of business? Give me a break! The Nvidia umbrella lifts all companies, especially these left-behind, almost forlorn, relatively inexpensive chip stocks.