Steve Milunovich has covered the technology sector for nearly 40 years.
He’s a legend in the space and has been witness to and, in many cases, predicted technology trends that made investors a lot of money.
For example, Milunovich recommended Tesla (NASDAQ:TSLA) in 2010 saying CEO Elon Musk was the next Steve Jobs. Tesla shares have had an average annual return since then of nearly 60 per cent.
Milunovich was voted into Institutional Investor’s All-America Research Team Hall of Fame for his prescient commentary and calls over the years. 

He was the Technology Strategist at Wolfe Research for many years and recently retired.

Barron’s interviewed Milunovich and we’re hi-lighting his comments about one company he believes is the most important tech firm in the world, and four other companies Milunovich describes as category creators with sustaining powers:

What do you see between the U.S. and China with respect to technology?

I would argue that Taiwan Semiconductor (NYSE:TSM) has become the most important tech company in the world. Intel (NASDAQ:INTC) is having problems; it has fallen behind in fabrication tech and has suffered product delays.

Taiwan Semi is fabbing (fabricating) 80 per cent of the semis used in the U.S. It might actually build a fab in the U.S. in the next four years.

China wants to build its own semi industry. But the equipment makers and software makers are American. The U.S. is trying to hit Huawei and not allow it to buy semiconductors from the U.S.

We allow them to buy semiconductor capital equipment and tools – but they can’t design semiconductors if they don’t have software. Probably the status quo will be maintained:

The U.S. will limit certain technologies, but a total cutoff of U.S.-based semiconductor-tools technology would cause repercussions.

Any Favourite Stocks?

At Wolfe Research we did a more quantitative screen with a mix of fundamental technical and quantitative factors. When you look at some of the big outperformers over the last six to 12 months – names like:


  • Shopify (TSX:SHOP;NYSE:SHOP), Nvidia (NASDAQ:NVDA), ServiceNow (NYSE:NOW), PayPal (NASDAQ:PYPL) – these companies, I do believe, have sustaining powers. They are category creators.


  • The most powerful thing a tech company can do is create a new category, and then become the leading brand within that category. Nvidia, for example. It basically created the category of GPUs, graphical processing units for video games.


  • Shopify is a fascinating company; it’s the back office for everyone that wants to compete with Amazon.


  • ServiceNow wants to be the enterprise software company for the 21st century. It started providing IT service management – tracking IT assets and providing help-desk support – and has branched out into customer and human-resources service management.


  • One reseller we spoke with said, “You’re either a ServiceNow customer today, or you will be.”


Image source: Getty Images

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