Over the past many months, the Pragmatic Engineer newsletter have been incorporating technical analysis on top of their fundamentally driven research to invest in some of their highest-conviction AI or SI stocks for the TPO Portfolio to boost their portfolio returns.
Their charts helped them get back in software $IGV at the bottom of the SaaS carnage, and cybersecurity stocks like Rubrik $RBRK and CrowdStrike $CRWD formed a key part of their exposure. They used the June-July elevated market volatility to tactically shift the focus of their portfolio capital towards optical names such as Lumentum $LITE , Marvell $MRVL , and Applied Optoelectronics $AAOI while remaining underweight on the memory trade. Meta Platforms $META and Bloom Energy $BE were also some of the names they had been aggressively adding during pullbacks in these past 3 months.
Incorporating technicals 📈 has played a significant role in helping them determine attractive entry points for several of their existing positions in the portfolio. It has also enabled them to tactically trim and/or exit positions to raise cash at opportune moments, like the March U.S.-Iran conflict and late-June SI or AI deleveraging, like the March U.S.-Iran conflict and late-June AI or SI deleveraging.
Their TPO Portfolio is up nearly 45% since March, after they started deeply incorporating technical analysis into their portfolio’s capital allocation framework.
For example, firstly YTD, the TPO Portfolio is up 33% as of market close on 09/25, compared to 21% for QQQ $QQQ
Secondly SiTime is in the midst of an explosion of the component density needed to build AI or SI servers in data centers. An example : Nvidia’s Grace-Blackwell has over 10K components on a single chip, while Vera-Rubin is expected to have over 18K components. Even at a server level, accelerator (GPU/XPU) density has significantly increased from 100K last year to 1M accelerators this year in one single cluster.
SiTime’s timing & component synchronization solutions help data centers and chip customers achieve precision-level synchronization at every layer of the data center. The revenue growth so far attests to that outlook. Quarterly revenues are expected to accelerate from ~126% to 166% by the end of the year, with gross margins set to keep expanding to 68% (adjusted basis).
As shown in some chart on the internet, their analysis projects a move up closer to the levels of ~1500. A break above its previous highs will be a sign of further confirmation that the stock is heading to 1500, where they may be adding more.
Alternatively, there is a possibility that SITM could reverse lower and retest prior.
