SARA SILVERSTEIN: And Applied Materials will be the first of the club's positions to report next month of the chipmakers, but we've already heard from Micron. The semis tend to benefit from all rising tides, lift all boats. Looking at Nvidia particularly, how important is it to look at reports across the industry and what will you be looking for when you look at Applied Materials?
CHRIS VERSACE: So the big thing for Applied Materials is it's our play on a couple of things. One is the continued overall growth in chips. As I have joked from time to time, it's not cotton. Chips are the fabric of our digital lives. And we continue to see new applications emerging, including AI, as well as continued growth in chip content, not only in smartphones, but in autos, in appliances, and other end markets.
So there's that aspect of it. But there's also the driving force that is the reshoring of chip capacity not only in the US, but also in the Eurozone and in Japan. So these are the reasons why we own Applied Materials. As far as the catalyst that we're watching, ASML, one of their competitors, reported this morning and they pulled in $4 billion in net new orders.
So we are starting to see those flow of funds happen. I think we really want to see continued bullish comments on capital spending. That's going to be from Taiwan Semiconductor tomorrow, but Intel reports next week, and others.
So for us, I think the question is, at what point do we see a disconnect between the share price and the fundamentals so that we can actually start building up our position in Applied Materials? It's had a fantastic run since we added it, but we are a little light on the overall exposure, and that's something that we would really like to increase as the tipping point, if you will, hits for this reshore spending.
SARA SILVERSTEIN: And we'll also hear from Marvell, which joined many chipmakers soaring in the first half of the year. Given the prevailing "chips can do no wrong" attitude, what could trigger a sell-off? Anything less than perfect or are they in good shape?
CHRIS VERSACE: I think they're going to be in good shape. Again, we've gotten incrementally positive comments on data center and cloud. Those are some of their core end markets. The network business could potentially be a little weaker just given some softer comments about spending from customers at Nokia and Ericsson.
But I do think that the largest end market is data center, to the extent that, again, I hate to sound like a broken drum, but if Taiwan Semiconductor gives us some good commentary, reaffirming what we've already heard, I think we're going to start to see Marvell shares move higher. We might have to readjust our price target from around 62 to potentially higher.
So that would be a good move. The question that I would struggle with, just so members are clear, is will we see enough upside in any price target increases to warrant revisiting our current rating on the shares? So I doubt it would get to a 1, maybe a 2, but we'll have to see based on what develops.