Monetary Matters with Jack Farley What Investors Are Overlooking in AI & Semis | Val Zlatev
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Jun 5, 2025 Val Zlatev, a Portfolio Manager and Senior Partner at Analog Century Capital Management, dives into the often-overlooked potential of AI and semiconductors. He argues that investors are underappreciating the impact of AI on the market and the end of Moore's Law for semiconductors. Val clarifies the misconceptions surrounding DeepSeek technology and discusses the crucial role of U.S. and Chinese government policies on the industry. He also highlights the cyclical nature of the analog semiconductor market and the importance of strategic portfolio management.
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Defining Hard Tech Sector
- Hard tech refers to all technology hardware excluding software and internet, mainly semiconductors and manufacturing equipment.
- The sector is huge, over $15 trillion in market cap, with 500-600 companies above $1 billion market cap.
Hard Tech's Decline and Neglect
- Hard tech was dominant in the 90s but lost appeal in the 2000s as software and internet became secular growth drivers.
- Lack of secular growth and cyclicality in hard tech made it a trading vehicle, pushing many investors to software.
Why Investors Miss Hard Tech
- Investors remain underweight hard tech despite a decade of semiconductor outperformance since 2015.
- Complexity of hard tech supply chains and fear of cyclicality discourages investors from focusing on this sector.