"If You're Investing in Overseas Stocks, Don't Miss These Picks"...July Recommendations [Weekend Money]

Shinhan Investment & Securities Announces "Top 10 Overseas Stock Picks for July"
Micron, CATL, and Eight Other Stocks and ETFs Selected

Micron, a US memory semiconductor company that posted record-breaking surprise earnings, Intel, which reportedly reached a chip alliance agreement with Apple, and Tower Semiconductor, an AI network company, have all been selected by Shinhan Securities as top overseas stock picks for July.

According to Shinhan Securities on the 28th, the "Top 10 Overseas Stock Picks for July" include Micron, Intel, Tower Semiconductor, Nebius, Carpenter, Bloom Energy, Structure Therapeutics, CATL, Shengyi Technology, and the STAR Market AI Semiconductor ETF. Among these, CATL, Shengyi Technology, and the STAR Market AI Semiconductor ETF are Chinese companies, while the rest are American.

First, Micron was highly rated for reaffirming the continuation of the memory-centric AI cycle in its recently released third-quarter results and for securing profit momentum due to a prolonged earnings peak phase. Shinhan Securities explained, "More than 40% of sales have shifted to long-term contracts, enabling higher profitability compared to the past," adding, "There is a high possibility of earnings upgrades." Key investment points include accelerated DRAM business improvement, a NAND market where demand far exceeds supply, and increased memory adoption driven by the spread of AI.

Intel was also selected as a top pick for July, as it is expected to benefit from CPU supply shortages and the anticipated turnaround in its foundry business. Shinhan Securities noted, "Intel is positioned as the biggest beneficiary of increased CPU demand due to the paradigm shift towards AI," and highlighted the public release of its (foundry) 18A-P performance. In addition, there are expectations that Intel will secure external references by participating in Apple's next-generation 14A Terafab project, which had previously been monopolized by TSMC for Apple manufacturing foundry. Collaboration with Tesla, SpaceX, and xAI on the Terafab project is seen as an opportunity for Intel to prove its manufacturing and packaging capabilities to major external clients.

Tower Semiconductor is expected to benefit from AI infrastructure, based on its specialized processes and silicon photonics. Shinhan Securities noted, "The proportion of the RF infrastructure segment, which was previously a key investment point alongside RF mobile, power, and sensor portfolios, will expand to 27% in 2025, up 10 percentage points from the previous year," adding, "A multiple re-rating is expected as the company shifts from a mobile-specialized foundry to an AI optical connection foundry." The company has also signed a $1.3 billion sales contract in the silicon photonics segment for 2027, which is six times higher than in 2025. In addition, there have been reports of multi-year supply contracts with IQE and partnerships with Marvell Technology.

Nebius, a neo-cloud company, was named a top pick for July after being added to the Nasdaq 100, with expectations that it will maintain its momentum in concentrated investment and partnerships. In March, Nebius signed a contract with Meta and issued $3.75 billion in convertible bonds following a $2 billion investment from Nvidia. In May, the company entered into a $2.6 billion partnership with Bloom Energy. Shinhan Securities commented, "The neo-cloud sector is experiencing explosive growth in demand due to the limited build speed of hyperscalers," and projected, "It will reach $400 billion by 2031." While the overall scale of debt and development timelines remain major risks, it is expected that high revenue growth will offset these concerns.

Carpenter, a specialty alloy company, is expected to see continued margin improvement as demand expands in downstream industries such as aerospace, defense, space, gas turbines, and semiconductor equipment. Carpenter produces high-performance superalloys based on nickel, titanium, and cobalt, and is recognized as a global Tier 1 supplier of specialty alloys capable of withstanding ultra-high temperature and ultra-high pressure environments. Shinhan Securities forecasted, "Margins will improve as Boeing increases production of the 737MAX, the US expands weapons systems production, and demand for space, gas turbines, and semiconductors rises." Key investment points include the long-term growth of specialty alloy demand in the aerospace, defense, and energy sectors, strong growth of specialty alloys for semiconductors as semiconductor processing becomes increasingly miniaturized, and overall margin improvement and upward earnings revisions.

Bloom Energy, a hydrogen fuel cell company, was included in the July top picks as it is expected to meet market consensus for second-quarter results and is anticipated to receive new orders. In the first quarter, Bloom Energy's adjusted operating margin was 17.3%, exceeding the market expectation of 11.1%. Shinhan Securities noted, "With improved cash flow, the company can grow without the risk of equity dilution. It is at the beginning of a structural growth phase," and highlighted, "As the service segment turns profitable, it is expected to serve as a future cash cow."

Structure Therapeutics, an anti-obesity drug company, was highly rated for reaffirming the competitiveness of its oral obesity drug. Shinhan Securities stated, "At the American Diabetes Association, the high efficacy and safety of oral anti-obesity drugs was demonstrated, showing performance that surpasses currently marketed drugs and securing competitive advantage," adding, "The company is likely to differentiate itself in the oral segment compared to competitors such as Viking Therapeutics." In particular, as major pharmaceutical companies are interested in acquiring companies with anti-obesity drugs to enter the market, Structure Therapeutics is considered an attractive partner. Large contracts such as Metsera-Pfizer and CSPC-AstraZeneca demonstrate potential demand, suggesting the possibility of high valuation in the future.

Chinese companies are also listed among the top overseas stock picks for July. CATL, the world's No. 1 electric vehicle battery and energy storage system (ESS) company, is noteworthy for evolving into an AI energy infrastructure company, as it acquired stakes last month in VNET, a leading Chinese IDC company, and the No. 1 AI data center HVDC company. Shinhan Securities evaluated, "CATL has secured structural cost competitiveness through vertical integration that goes beyond simple battery manufacturing to include materials, cells, and recycling." In addition, "Leveraging its strength in ESS, the company is accelerating the establishment of an ecosystem that connects high voltage direct current (HVDC), power conversion, and data center infrastructure," and noted, "With the bottleneck in the AI era shifting to GPUs, power, and energy storage, this is a phase where valuation re-rating is likely."

Shengyi Technology, the largest copper clad laminate (CCL) manufacturer in China and the world's second-largest, was included as a noteworthy investment target, as the CCL shortage is entering a major cycle. Shinhan Securities emphasized, "The shortage of high-end CCL materials is intensifying thanks to the advancement of AI servers," and "Since the second quarter, price increases for advanced CCL products for AI servers, high-speed switches, and data centers have accelerated. Shengyi Technology is the biggest beneficiary in China." Driven by the advancement of AI servers, the CCL market size is projected to grow from $1.5 billion in 2024 to $18.7 billion in 2027. With overseas expansion accelerating and additional production capacity secured through new production lines starting up in the second half of the year, Shengyi Technology has further growth potential, making it an attractive investment point.

Finally, the STAR Market AI Semiconductor ETF was selected by Shinhan Securities as a top pick. This ETF focuses on leading Chinese AI semiconductor companies and is composed only of core semiconductor companies listed on the STAR Market, which are not open to foreign investors. Major holdings include SMIC, Hygon Information, Cambricon, and Lanci Technology. Shinhan Securities noted, "The IPO event for CXMT, China's largest and the world's fourth-largest DRAM company, is imminent," mentioning that approval was granted in June, and the listing is expected as early as July. The company added, "With the listing of China's largest DRAM manufacturer during a strong memory market phase, the local equipment and materials value chain is expected to strengthen."

This content was produced with the assistance of AI translation services.