Chip Frenzy

Issue 64;

• Microchips dominate market leadership like never before.
• Emerging markets are booming, driven by technology.
• Europe gets left behind.

The World Index maintains a bullish ByteTrend Score of 5 in USD. The 30-day moving average is rising rapidly.

World Index – Developed Markets – Daily

Global Equity Breadth – CAPR

The number of stocks rising (blue) versus falling (red) is stable from last week. However, only 17% of stocks are beating the market, which is low, while 51.3% are lagging. Market leadership is concentrated.

Industry Trend Changes in CAPR – Just Chips

The average breadth by industry group hits this home. The only strong group to improve was Technology Hardware. Software improved from a low base. The consumer remains in a slump.

Semiconductors

The chip trade has been strong since the launch of AI by ChatGPT in November 2022. Semiconductor stocks had broadly followed the Magnificent 7 – i.e. leading US technology stocks - until late last year. Since the April Iran recovery, chips have surged, driven by Korea and Taiwan.

Net Winners - Stay Long Energy, Materials, Financials

The winners-less-losers metric guides asset allocators. As the chart above shows, tech is split between software and hardware. Software is lagging behind, while hardware leads. The commodity bull market is still alive and well.

Regional Performance - CAPR

Emerging markets remain strong as semiconductors amount to 22.9%  of index exposure, with a further 14.5% in technology hardware. Do not mistake this for macro signals. Tech-lite Europe is lagging behind.

Trend Type Performance

The divergence is widening. This is a momentum market with minimal participation from the lagging and oversold stock groups. Leadership is narrow, but it is making the vast majority of the market gains.

Regions and Industries Average Relative Score

This table (below) shows the average CAPR score for each global industry, by region and in total.

Technology Hardware is now the strongest sub-sector trend, relegating Metals & Mining to second place. Tech Hardware is focused on chip stocks like Samsung, Micron, AMD, and SK Hynix, with memory chips being a particular focus at the moment. Alongside them, Banks and Energy are still strong on average, although banking is falling back. Meanwhile, Asian holding companies, like the Japanese trading houses that Berkshire Hathaway has been buying, are also in the top four.

Home & Lifestyle (luxury stocks) are now rock bottom, while Software is still low but picking up. The panic is over for now. However, for sectors like Healthcare, General Retail, and Food & Beverages, things are only getting worse in CAPR terms, as they fall further behind the index. Utilities and Infrastructure are also weakening from a strong position.

This table has never been so red since we have been writing Global Trends.

User Guide

Refer to our GTI: User Guide for an overview of the key concepts and terminology used in this report. These concepts may take a little bit of getting used to, but they are very powerful once you do.

Leading Trends with New Highs

These stocks are trading at the 30-week CAPR highs with a ByteTrend Score of 5. All charts shown are CAPR rebased to 100.

Micron Technology

Micron, the poster child for the current rally, gained another 15% last week. It’s now made five consecutive daily highs, becoming the fourth-largest chip stock in the process (after Nvidia, TSMC, and AMD). It’s driven by the AI memory boom, in which demand for high-bandwidth memory and other advanced chips has propelled a small group of tech hardware companies to incredible heights in a short space of time. The stock is now up 120% since its March 30 low and nearly 1,000% from its lows last year, leading to comparisons with 1999.

MediaTek

We are at the stage where catch-up trades are starting to move. MediaTek wasn’t invited, but now it is, as the market broadens its search for winners from the memory chip boom. Google announced it would use it as a supplier, triggering the recent spike higher, which has seen it rise 140% in the last month.

Prysmian SpA

Prysmian makes cables for electricity grids and telecom networks. It is tied to electrification and the energy transition, but also the data centre boom, as their demand for connection to the grid grows. Its latest results show continued organic growth, better margins, and strong cash flow.

New Leading Trends

These stocks are trading at the 30-week CAPR highs with a ByteTrend Score of 5, except they are new trends this week, having previously had a score below 5. All charts shown are CAPR rebased to 100.

Rockwell Automation

Rockwell Automation makes industrial automation hardware, software, and services that help factories run more efficiently. It sits in the middle of long-term trends like factory automation, reshoring, AI-enabled manufacturing, and productivity upgrades. These have supported stronger margins and earnings even when revenue growth was uneven. It has recently returned to growth, and its latest quarterly results beat expectations, with sales up 12% YoY to $2.24 billion and EPS of $3.30m, up 30% YoY.

Emerging Trends

These stocks are trading at the 30-week CAPR highs with a ByteTrend Score of less than 5. They don’t have to be in an uptrend, just emerging. All charts shown are CAPR rebased to 100.

Anglo American

The talk may be of the new tech, but the old world still has a huge role to play. Anglo is focused on copper, premium iron ore, crop nutrients, diamonds, platinum group metals, nickel, and steelmaking coal. Its mega-merger with Teck Resources (whose coal business went to Glencore) is now complete, making it a major global copper miner. The long-term bull case for copper is burning slowly, but remains intact.

Weakening

These stocks are trading at the 30-week CAPR lows with a ByteTrend Score above 0. They are weakening trends but not yet downtrends. All charts shown are CAPR rebased to 100.

IBM

IBM today is a mix of consulting, software, and infrastructure, selling hybrid-cloud software and services, enterprise AI tools, and consultancy services. It has a reputation for moving slowly to adapt to new trends, wasting time and money on legacy business. It is proving that again, as it remains focused on cloud services and software, and isn’t moving fast enough on AI. It is focused on enterprise AI solutions, not hardware, and that is not the right place to be at the moment. 

Rheinmetall

Rheinmetall was 2025’s answer to Micron. It traded below €100 in 2022, before the Ukraine war, and reached €2,000 last year. However, it offers a stark warning to those who would chase the AI and tech hardware trends today.

Bear Trends

These stocks are trading at the 30-week CAPR lows with a ByteTrend Score of 0. They are in a downtrend. All charts shown are CAPR rebased to 100.

Berkshire Hathaway

Between 1998 and the peak in 2000, BRK lagged the world by 60%, ahead of a 25-year run of outperformance. It has just had its worst 12-month period, in relative terms, since that time. When animal spirits run high, stability and quality are seen as boring, but no doubt their time will come again, as it did then.

Toyota Motor Corp

The auto industry is undergoing a classic disruption. Legacy leaders are stuck between a declining market for petrol vehicles, which was already a competitive, low-margin business, and a new market for electric vehicles, where they are not the technology or process leaders. That is BYD, Tesla, and other Chinese firms.  

GTI 200 Spreadsheet

We are pleased to share the GTI 200 spreadsheet. Download the spreadsheet below to view the CAPR and local currency scores, and more, for the world’s largest 200 stocks. Have a look at the different groups and the main list “All stocks”. The Insights tab is interesting, and don’t forget to expand the columns by clicking on the “+” at the top of the page if you want to see more trend data.

Outlook

The concentration is narrow, and the market is once again resembling the behaviour seen in the late 1990s. The economy is K-shaped as the consumer suffers, while the AI capex boom continues. It feels late in the day to chase chips.

Thanks for reading GTI.