Nibbling at Nvidia, Building Backlash, and Korea’s Volatility Curb 7/16/26

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**Kelly Evans** (0:55)
You're listening to The Exchange. Here's today's show.
Leslie, thank you very much. The chip and memory stocks are weighing on the market again. As we get more Q2 earning surprises, I'm Kelly Evans and welcome to The Exchange. Taiwan Semi, the latest chip maker to deliver good results that failed to impress. We saw the same with ASML and Samsung. Memory bearing the brunt of the pain with Sandisk, Micron, Seagate, all sharply lower. All of them close to 30% or more from their 52-week highs. What is working, flip side, is healthcare. A big earning surprise from UNH, United Health. That's really the only reason the Dow is outperforming today.
As strikes and threats continue in the Middle East, United Airlines says it expects $6 billion in added fuel costs this year. But let's begin with the AI trade amid the wild swings in the chip and memory space. Our first guest says some of the names have finally been de-risked enough to look attractive. Joining us in our opening exchange is Tom Hancock, Portfolio Manager of the GMO US Quality ETF. Really glad to check in with you, Tom, at a time like this. Where do you see the opportunities?

**Tom Hancock** (2:08)
Hi, Kelly. Well, I guess you'd say for us, the big opportunity is the one that's lying in plain sight, which is Nvidia. We haven't held that stock for a while. We've held other names instead, SemiCap Equipment and things like that. But Nvidia is a stock that basically hasn't outperformed the market year to date. It's up only modestly in absolute terms. It's trading less than 20 times forward earnings. The way we think about that is, sure, there's some scope for margin erosion. Sure, there's some scope to lose share to custom silicon, but they are still the de facto standard in the industry. To get a company that can benefit from secular tailwinds at that kind of a multiple, we think it's pretty attractive.

**Kelly Evans** (2:50)
Just to reiterate, as we're showing Nvidia down about two and a half percent there, you're saying, and a lot of people, anecdotally I hear, those who weren't early on the AI trade, those who are not tech special, I'm talking about just members of the public who weren't big on Nvidia in the first place are now going, do you think now's the time? I think they're going to really listen to what you're saying here. You say you've not invested in Nvidia historically, but you've bought it recently because it's de-risked.

**Tom Hancock** (3:15)
Yeah.
It's not that we haven't liked Nvidia historically, it's just we felt there are better places in the AI ecosystem to invest. The Taiwan Semi that you were mentioning and the SemiCap equipment companies, you're actually a little bit earlier to get into Broadcom as we saw a custom silicon that they manufacture taking share. But again, Nvidia is the elephant out there, the elephant in the room, you might say, and it's odd frankly how much it's been neglected. Really, you could see in the stock price volatility too. I think it's the retail hot money has moved on more to the memory trade. It's almost too big a stock to be swung by levered ETFs and things like that, so it's just sitting there right for the picking.

**Kelly Evans** (3:59)
I want to mention also, I have this sense and maybe you do too or maybe it's just self-evident that, you say you're positive on some industrial companies like Schneider or the HVAC company Train that have an AI data center benefit, win from build outs of power infrastructure. Those are both new holdings you say in the ETF. So you can again, I think it's going to become more and more easy to find ways that are not just in the memory names to play the AI trade. So I wanted to mention that while also asking you why you're not invested in the memory stocks.