Tech Old-Timers Day?
I am not sure how to characterize what is working in tech because it is a little bit of the old and some of the not-so-old, but it sure isn't the cloud and it definitely isn't the Internet.
I am talking about that blowout quarter last night from once-darling fiber-optic king Finisar (FNSR) , on top of that beauty of a number from Ciena (CIEN) yesterday morning. These haven't had a pulse in years. Or at least a steady one. Or the steady drumbeat higher of Juniper (JNPR) . They all matter, because they are ultimately about all of the higher use of bandwidth to send all sorts of complicated video programs to your cellphone, which is an area that has limitless demand.
These are remarkable moves, ones that were hoped for about 15 years ago when optical equipment was all the rage. Subsequently, these stocks got crushed, as the technology ran ahead of both the demand and the quality of the device.
That's no longer the case -- as we saw with the amazing Broadcom (AVGO) conference call, where this one-time simple supplier to cellphones is now a major provider of communications equipment to pretty much everyone. While it wasn't explicitly talked about on the conference call last night, Broadcom has the best next-generation technology for 5G -- and it looks like the future for that technology is now.
These companies all took off after PC-related companies started peaking. They were the replacement techs, and they had amazing runs before they crashed and burned. Remember, even Broadcom, the best of the lot, had to surrender to Avago given its low valuation.
Then, speaking of throwbacks, there's the endless renaissance of Advanced Micro Devices (AMD) and Micron (MU) , as well as Western Digital (WDC) , three companies I extolled at my Deal Economy speech a week ago. Just red hot.
They are total throwbacks. I bet we could get old signed jerseys from those guys. A lack of new equipment, a tightening of demand, and a user base that includes machine learning and artificial intelligence all play a part in the renaissance -- as does, in the case of AMD, gaming chips, where they are second only to Nvidia (NVDA) in that hypergrowth market.
Now of course Broadcom was amazing last night -- not that we would expect anything less from the brilliant and unheralded Hock Tan, the CEO who put this monster-good company together. And that's moving Skyworks Solutions (SWKS) , too. You have to wonder if it can do the same thing to Apple (AAPL) as a read through, but nothing's really been able to budge that behemoth.
But this is an old-school rally, and it is mighty hard to get your arms around. It's got nothing to do with Trump. It has nothing to do with visible telco spending. It mostly has to do with being the last man standing.
These are all last men standing.
Maybe that's enough?
Funny, the only non-participant of the old telco winners is Cisco Systems (CSCO) , which has none of the pizazz of the winners. But it does have $60 billion offshore. (CSCO and AAPL are holdings of Action Alerts PLUS.)
Who knows what it can do with that money? Hence, why it remains a buy and is owned by Action Alerts PLUS, with the idea that it can buy its way back into the race while ridding itself of old business with little-to-no payoff.