Chip stocks have been on a euphoric high. The party continues, attendees are having the best time, but those with experience have seen this play out before. As we head into the late hours where the music stops, people start puking and things can get quite messy. The upcoming Nvidia earnings will be a pivotal moment. In recent quarters they have beat and raised, yet Nvidia has dropped and pulled the SMH down with it. Will the same happen again? Who knows...
That doesn't mean we have to sit on our hands, there are still plenty of opportunities in the market, even in chip stocks. Let me draw your attention to an elite IP business in the sector - Universal Display Corporation (OLED). OLED is a capital-light intellectual property monopoly that owns a legal toll bridge over the entire display ecosystem. The drop to the low $90s represents an opportunity. A business boasting software like 75.7% Gross Margins and a 37.8% Free Cash Flow Margin is being priced at a meager 18.3x trailing P/FCF and 14.1x EV/EBITDA.
This is a highly cyclical business, typical of this industry. The downturns are brutal, but the upside can be life changing. From its historical cyclical lows, OLED completed a massive 904.22% macro explosion to its major wave peak. This expansion phase was subsequently digested by a violent 65.28% drop over a 643 day capitulation window. The present down cycle has almost cloned this historical signature. The stock has plummeted 64.55% from its recent macro double-top, tracking a grueling 700 day contraction channel. This indicates that the current selling pressure has fulfilled its historical parameters for absolute seller exhaustion.
Are we about to reverse trend? Major trend reversals are signaled by breakouts in the RSI, which we don't quite have yet. As long as momentum remains trapped beneath these white resistance lines, price action stays heavily suppressed. I would like to see a break out of this downtrend above $100.
Despite the lack of confirmation, Insiders are buying - the CEO Steven Abramson just purchased over $1m in stock around $93. What makes him so confident the low is in? Samsung Display is actively deploying billions to bring the world's first Gen 8.6 IT OLED mass production line online in Q3 2026. BOE's $9 billion Gen 8.6 fab has entered customer validation and is scheduled for mass production right behind it. These fabs are explicitly built to handle Apple’s multi-year transition of the MacBook Pro and iPad lineups to OLED displays. This is all ahead of schedule, as OLED had signalled this would happen later this year.
Apple is about to mass adopt OLED screens, therefore Universal Display Corp should see the end of the brutal down cycle that has plagued the stock in recent years. That adoption could feed directly into OLED's top line revenue growth. I am watching this closely and will likely take a position soon. Not financial advice, do what's best for you!
That doesn't mean we have to sit on our hands, there are still plenty of opportunities in the market, even in chip stocks. Let me draw your attention to an elite IP business in the sector - Universal Display Corporation (OLED). OLED is a capital-light intellectual property monopoly that owns a legal toll bridge over the entire display ecosystem. The drop to the low $90s represents an opportunity. A business boasting software like 75.7% Gross Margins and a 37.8% Free Cash Flow Margin is being priced at a meager 18.3x trailing P/FCF and 14.1x EV/EBITDA.
This is a highly cyclical business, typical of this industry. The downturns are brutal, but the upside can be life changing. From its historical cyclical lows, OLED completed a massive 904.22% macro explosion to its major wave peak. This expansion phase was subsequently digested by a violent 65.28% drop over a 643 day capitulation window. The present down cycle has almost cloned this historical signature. The stock has plummeted 64.55% from its recent macro double-top, tracking a grueling 700 day contraction channel. This indicates that the current selling pressure has fulfilled its historical parameters for absolute seller exhaustion.
Are we about to reverse trend? Major trend reversals are signaled by breakouts in the RSI, which we don't quite have yet. As long as momentum remains trapped beneath these white resistance lines, price action stays heavily suppressed. I would like to see a break out of this downtrend above $100.
Despite the lack of confirmation, Insiders are buying - the CEO Steven Abramson just purchased over $1m in stock around $93. What makes him so confident the low is in? Samsung Display is actively deploying billions to bring the world's first Gen 8.6 IT OLED mass production line online in Q3 2026. BOE's $9 billion Gen 8.6 fab has entered customer validation and is scheduled for mass production right behind it. These fabs are explicitly built to handle Apple’s multi-year transition of the MacBook Pro and iPad lineups to OLED displays. This is all ahead of schedule, as OLED had signalled this would happen later this year.
Apple is about to mass adopt OLED screens, therefore Universal Display Corp should see the end of the brutal down cycle that has plagued the stock in recent years. That adoption could feed directly into OLED's top line revenue growth. I am watching this closely and will likely take a position soon. Not financial advice, do what's best for you!
Trade active
First entry at $84, waiting for lower to add more
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The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.