The AI Chip Bubble: Why South Korea & Taiwan Are In the Danger Zone | Michael Fritzell | Asian Century Stocks – Monetary Matters with Jack Farley

The AI Chip Bubble: Why South Korea & Taiwan Are In the Danger Zone | Michael Fritzell | Asian Century Stocks – Monetary Matters with Jack Farley — Transcript

Market views

Bullish

NICE— NICE Information Service is Korea's dominant credit score provider trading at 9-10x PE with 6% dividend yield, stable double-digit earnings growth, and high margin accretive growth. Michael sees it as significantly undervalued compared to FICO.
KOREASM— Korean small caps offer attractive valuations at single-digit PE ratios with strong insider buying, capital market reforms reducing inheritance/dividend taxes, and new director liability laws. Michael sees this as similar to Japan's pre-reform opportunity with value stocks positioned to outperform.
TOAP— Toa Paint in Thailand trades at 8x PE with growth potential, offering significant value compared to US peer Sherwin Williams at 28x PE.
JPSAAS— Japanese SaaS companies trade at 2-3x sales while growing 20%+ with long-term margin guidance of 20-30%, representing exceptional value in domestic yen-earning growth companies.
NTDOY— Nintendo is down 50% but positioned for strong 2027 with Zelda movie and new Mario game. Stock is oversold despite Switch 2 being a fantastic console, with DRAM price concerns potentially peaking.
SEASIA— Southeast Asian infrastructure stocks and cheap equities in Thailand and Philippines offer attractive valuations with single-digit PE ratios and high dividend yields, though lacking near-term catalysts.

Bearish

000660.KS— SK Hynix and Samsung Electronics are in a bubble with unsustainable profit estimates of $200-250B by 2028 that would make commodity chip producers the most profitable companies globally. Chinese competitors will bring new supply in 2027+ with high current gross margins indicating cycle will turn.
DRAM— Commodity DRAM market shows extreme speculation with daily pricing indicating true commodity status. Chinese supply expansion from companies like Yangtze River Memory and Changxin will pressure prices starting 2027, with China's proven ability to scale hardware production.
CHINAEQ— Chinese equities face structural headwinds from massive insider selling, 70% decline in property construction, US tariffs, and unpredictable government crackdowns across sectors (tech, education, brokers, gaming). Communist party reasserting control with mandatory party committees in companies makes independence questionable.
TAIWANSP— Taiwan market shows extreme speculation with violent price movements, proliferation of technical analysis accounts, average PE ratios around 30, and retail speculation potentially beyond 2020 levels. While TSMC bottleneck is sustainable, broader market appears extended in AI boom.

Not investment advice.

Mentioned

Market views