A Goldman Sachs Asset Management Co. fund manager is joining bullish calls on semiconductor shares, expecting a boost from data centers and ChatGPT.
(Bloomberg) — A Goldman Sachs Asset Management Co. fund manager is joining bullish calls on semiconductor shares, expecting a boost from data centers and ChatGPT.
“The semiconductor industry is a growth industry,” said Ichiro Kosuge, who manages the GS Japan Focused Growth Fund that’s outperforming 96% of its peers this year. “While we understand that the near-term outlook may be challenging, we believe data centers and automotive semiconductors will drive growth going forward.”
Kosuge said he’s backing companies that can keep up with the global semiconductor industry’s expansion even after a decline in the number of Japanese chipmakers. Top holdings in the fund include Advantest Corp., which is up 36% this year compared with the Topix’s 7.6% advance. It also owns shares of Hoya Corp. and Shin-Etsu Chemical Co.
Chip stocks have gained this year as interest in ChatGPT and other artificial intelligence services has brightened sentiment for high-end semiconductor producers. Investors such as Pictet Asset Management Ltd.’s Young Jae Lee and Allianz Global Investors’ Benson Pan are betting on a resurgence in the sector even as memory makers struggle with a global supply glut.
Kosuge expects fundamentals for chip companies to recover in the second half of the year and into next year. The recent share-price rally has already factored that in to some extent, he said.
While the ChatGPT frenzy should propel semiconductor demand and data-center spending, “these types of themes emerge from time to time,” Kosuge said. He’s also focusing on factory automation and manufacturing as investment in those areas ramps up.
“Right now, we see investment in EVs and batteries expanding very significantly and, as with automation, we see a growing flow of investment in these new industries,” he added.
Kosuge, who manages the fund under Goldman’s 577.1 billion yen ($4.3 billion) Japan Equity Partners Strategy, has also been steadily buying shares of domestic-focused firms as inbound travel ramps up. He recently added discount store operator Pan Pacific International Holdings Corp. and increased his position in fashion retailer Shimamura Co., according to data compiled by Bloomberg.
“We expect to see valuation improvement for domestic-demand stocks,” said Kosuge. “From a future earnings perspective too, we also see attractive opportunities for a select few – but certainly not all – of these stocks.”
–With assistance from Momoka Yokoyama.
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