So, a recent article on Investopedia starts off warning of a possible bubble in defense stocks (eg. LMT, RTN, etc). Throws out some scary lines about the dot-com bubble, etc. (different industry, right?). But strangely, ends the article with 3 points about how investors should react, with 2 of those 3 points being bullish in nature, not bearish. So is the headline just click-bate or confusion? (I am actually being a bit cheeky– I like the article; it does us a favor by giving some counter points to the main argument).
The three points:
It’s bubble time, take profits (well, ok, that’s helpful). I am not in agreement.
Refers to Zacks Research being bullish:
“…with the United States being the largest [worldwide] supplier of defense equipment, it is undoubtedly a golden era for U.S. aerospace and defense stocks.” 
Again refers to Zacks being bullish:
“…Widespread geopolitical tensions that are prompting nations, both developed as well as developing, to rapidly expand their arsenal should keep the outlook for the U.S. aerospace and defense stocks favorable.” 
“Intel has admitted it is facing a microchip shortage due to a surprising rally in the personal computer market.” 
This is a significant admission. Global PC demand has been higher than expected of late. Intel chief (interim) Bob Swan has confirmed this by “…publishing an open letter warning business partners that supply was “tight”. 
… and saying:
“The surprising return to PC market growth has put pressure on our factory network … supply is undoubtedly tight, particularly at the entry level of the PC market…” 
Experts expect the shortage to linger throughout the year. Obviously this plays into the retail holiday season at year’s end.
My own take is that Intel will gain in the short term due to price increases and speculators attempting to exploit the shortage; however, supply contracts are often long term in nature to avoid situations like this and Intel will most certainly lose future revenue if they cannot keep up with the pace of demand. Long term, Intel’s goodwill with down-line manufacturers will most certainly suffer. I think future supplier contract negotiations will become even more difficult for Intel. Better forecasting of demand for the products that lie within their wheelhouse should not be a struggle, but seems it has been.