The $SOX semiconductor index is down again today led by Super Micro Computer (SMCI) and Nvdia (NVDA).
Smelly $SOX
AI Server Margin Anxieties
Yahoo!Finance reports Super Micro’s Weak Profit Fuels AI Server Margin Anxieties
Super Micro Computer Inc.’s shares slid on Wednesday after the company reported revenue and profit that missed analysts’ estimates, outweighing an annual sales outlook that was billions of dollars above Wall Street projections.
Profit, excluding some items, was $6.25 a share in the period ended June 30, the company said Tuesday in a statement. That fell short of Super Micro’s previous forecast and the $8.25 average analyst estimate. Sales were $5.31 billion, compared with an average projection of $5.32 billion, according to data compiled by Bloomberg.
A jump in demand for the equipment that powers artificial intelligence software has helped drive sales at San Jose, California-based Super Micro, which makes data center servers. The company forecast revenue of $26 billion to $30 billion in the fiscal year ending June 30, 2025. Analysts, on average, estimated $23.6 billion.
Still, investors are worried about the longer-term profitability of AI-optimized servers sold by companies like Super Micro, Dell Technologies Inc., and Hewlett Packard Enterprise Co., said Woo Jin Ho, an analyst at Bloomberg Intelligence. Super Micro missing its own profitability targets in the recent quarter will likely fuel these anxieties, he said.
Super Micro also announced a 10-for-1 stock split, with trading beginning Oct. 1. The shares have more than doubled in value this year and been added to the S&P 500 and Nasdaq 100 indexes following increased demand for servers. Still, the stock has declined about 48% from a peak in March.
Nvidia stock falls 5%, Chip Stocks Sink
Also consider Nvidia stock falls 5%, chip stocks sink as Wall Street calls out ‘tremendous opportunity’ after sell-off
Nvidia (NVDA) stock fell more than 5% on Wednesday, erasing gains from early in the session as chip stocks led the way lower during a trading session that saw all three major indexes close in red figures.
The sell-off in Nvidia and other chip names came despite a bullish note from Piper Sandler analysts published Wednesday, which pointed investors to a “tremendous opportunity” to buy some chip names following sector’s recent sell-off.
Are the “Magnificent 7” Stocks Today’s Version of the “Nifty Fifty”?
On August 4, I asked Are the “Magnificent 7” Stocks Today’s Version of the “Nifty Fifty”?
The “Magnificent 7” are TSLA, AAPL, META, GOOG, MSFT, AMZN, NVDA. Buy and hold forever?
Tremendous Opportunity
Nothing is buy and hold forever.
The tremendous opportunity is to take some chips off the table and raise some cash. Individuals can do that, but in aggregate it’s impossible.
Someone will ride every stock to wherever they are headed.
1M AAPL, Googl, MSFT, NVDA…might close > July low and that’s is good enough.
Nvidia’s Blackwell chip is dead on arrival. There is no cure for asymmetric heating warping and distortion of the chip assembly. To say the chip has a design flaw and will be delayed at least three months is an understatement. Nvidia has a $2 Trillion market cap. Poof! and it’s gone.
I don’t own chip companies so I don’t care much. It’s a lousy business with lots of competitors and very high capex. The companies who design them and farm out the manufacture are more interesting but more vulnerable. I learned long ago that chips suck.
Frito-Lay is a pretty solid bet…..
AI is planned obsolescence. It never ends well. The junkyards are already piling high with vehicles, machines, and appliances rendered useless and unrepairable by digital controls.
The computer market is saturated. I’ll likely never buy another computer again. My next phone is going to be a dumb flip phone.Most kids, most computer illetertes, don’t own a computer and never will except to play games on. They mostly use their phones for interacting with internet and each other.
Microsoft makes each version of windows, more invasive and more difficult to just do anything at all. There is no impetus to upgrade software since it gets worse with every iteration.
Apple is cutting their nose off by closing their environment more and more. Embedding ram and ssd into the motherboard of their computers, means they are not upgradeable or repairable. Eventually even the most stupid users will realize they are in a blind alley after a few bloody blows to their foreheads from marching into the wall.
AI is the great saving Hail Mary, except we know most Hail Marys fail…
I fail to see semiconductors becoming anything but a niche market in the future.
There’s virtually no end to what can be made more efficient by embedding semiconductors, once those get cheap, small and efficient enough. They will only ever become more common.
If you’re talking about current headlining semiconductor designers; that’s a different story. Like all else; semiconductors were once novel and exotic. They are now increasingly becoming commoditized. The ability to command big markups based on supposedly far-better-than-the-rest design or manufacturing processes, is fading away. Instead, it will increasingly be like designing and manufacturing bolts. There ultimately are some differences between makes, but they’re not exactly earth shattering.
The more advanced the chips get, the more new manufacturing must advance as well. All sounds good, if you’re in a position to invest Billions, but unfortunately for New Chip Technology, as well as AI imo too, there is No $ available to invest for such things. We blew all our $ on stupid and senseless Wars as usual. We gave Ukraine alone, enough $ to have flown high in new technologies via Chips and AI, but no longer available now, as we give even more that must be printed.
I so Hope & Pray for Our Country, that we finally start Spending OUR $ on US right here in the U.S. Stop giving it away, without approval, it’s Our $, and stop playing God with the climate while your at it too. We don’t need to alter the Earths Temperature by 1 degree (if that) at a cost of Billions!!!
If they start a civil war they could keep $ at home.
“Nothing is buy and hold forever.”
Agree.
I can be invested in a long-term trend for many years, but I will still trade a portion of my position, often daily. And as the long-term trends change, so do my investments. I am still heavy into oil and gas stocks.
even should fusion energy ever become practical on a large scale basis, oil and gas will be needed for fertilizer feed stock, chemical feedstocks, lubrication etc.. Oil and gas is a buy and hold, maybe rotate between companies based on management and oil leases etc.
I am not expecting fusion anytime soon, but it would be fabulous if it happened at an affordable price. Our standards of living and economic growth require ever more energy. And we will eventually run out of cheap oil and gas. So we need more of everything else; meaning nuclear fission, and renewables. Based on current trends, we will be using “more” oil and gas every year for the next decade at the minimum.
losers seem to win by losing. in markets and in life. paraphrasing the great ed seykota. the best trend FOLLOWING trader of our generation. emphasis on following.
Past 6 months, Regional Banks (IAT) up 11% trounces (^SOX) down 2%.
What happened to CRE crash?
I’d be a contrarian but I disagree too much.
Yeah that is crazy right. I’ve mostly bailed out of the market. But my two best performers YTD are a regional bank and a REIT. My theory is, if you are not a contrarian you are bound to be a victim. Eventually!
Best to avoid chips. They’re just carbs and salt.
mostly fat, the carbs are just a carrier to hold the fat and grease in transit from mfg to your mouth.
American policy is to force China (the largest chip market in the world by far) to put all its considerable energy, manpower and money into matching and/or surpassing America’s current lead in chip technology.
I am extremely skeptical about the projected continued complete dominance of the advanced A.I. market by the current American leaders. It is a bubble just like any other bubble. Meaning there might actually be something there but currently it is priced on sizzle.
Wait until the Greens around the world turn as much energy to A.I. as they currently do to the fossil fuel economy.