Friday, April 19, “Ten times more shares in a year”$Super Micro Computer (SMCI.US)$It plummeted by more than 20%, and the stock price closed down 23%, hitting a new low of more than two months.
Ultramicrocomputer said in a brief press release on Friday that it will announce the third fiscal quarter results on April 30. However, the company broke the previous practice of providing initial results, which raised concerns among investors and frantically reduced their holdings of the stock.
Looking back at January of this year, Ultramicrocomputer raised its sales and profit guidelines 11 days before announcing its second-quarter earnings report. The impressive performance forecast caused ultra-micro stock prices to rise violently, and also contributed to the latest sharp rise in AI concept stocks in the first quarter of this year.
The market generally believes that the ultra-micro company did not give a positive advance statement, which is viewed as negative. In particular, this is currently at a time when the field of artificial intelligence is important, which heightens market concerns. If the results are excellent again this time, they are likely to say something, so it's worrying.
It should be noted that Supermicro did not respond to media inquiries on Friday.
An analytical article mentioned another situation: Currently, there are more and more so-called ultra-micro direct H100 contracts, and there were before, but now the delivery period is getting shorter and shorter, 1-1.5 months.
Ultramicron produces computers and sells them to enterprises for businesses such as web servers, data storage, and AI training.$NVIDIA (NVDA.US)$, NASA, and NEC are all its partners. Ultramicrocomputer stock prices have soared in recent years, mainly due to strong market demand for their servers (infrastructure for AI chips). For Ultramicros, it doesn't matter who wins the AI competition. Because if you buy an artificial intelligence chip, whether from Nvidia or another company, you need to plug in and cool the chip — that's where ultrafine comes in.
Ultramicrocomputer is one of the best-performing technology stocks in 2022 and 2023. It surged 246% last year, and the previous year's increase was as high as 87%. Ultra Micro's sharp decline on Friday made it the company with the biggest decline in the S&P 500 index constituent stocks on the same day. The company just joined the S&P 500 index last month. By the close of trading on Friday, ultra-micro had a cumulative decline of more than 40% from the high set this year, but there was still an increase of about 150% during the year.
Ultra Micro also dragged down a number of technology stocks, including Nvidia. Chip stocks and AI concept stocks were the hardest hit areas, and plummeted on Friday. These tech companies have not released any news that could cause their stock prices to plummet.
Nvidia plummeted 10% on Friday, the biggest one-day decline since the beginning of the COVID-19 outbreak in 2020. The intraday market capitalization fell to $1.9 trillion, a two-month low. Since October last year, Nvidia's closing price has never fallen below the 50-day moving average, which is a key technical hurdle. Nvidia doubled and the ETF fell 20%. “Nvidia concept stock” SoundHound fell more than 7%.
In terms of other important technology stocks, Arm fell nearly 17%, AMD fell more than 5%, Meta fell more than 4%, Intel fell 2.4%, and Microsoft and Apple fell more than 1.2%.
In fact, this isn't the first time that ultra-micro companies have taken over AI concept stocks such as Nvidia. In August of last year, the ultra-slight single-day sharp drop of more than 23% also dragged Nvidia down nearly 5% on the same day.
The NASDAQ was also dragged down, falling more than 2%, continuing its recent decline, in stark contrast to the Dow Index, which was still rising on the same day. Technical indicators show that the NASDAQ has clearly entered a phase of excessive decline. However, it should be clarified that a technical decline does not mean that there will definitely be a rebound later.
The accelerated decline in technology stocks such as semiconductors and AI this week began with the earnings report of Europe's highest market capitalization technology company ASML (ASML). The total value of ASML's new orders in the first quarter fell far short of expectations, with a sharp drop of 61% over the previous quarter. Previously, it had a record order volume in the fourth quarter of 2023. ASML explained that the decline in new orders was mainly due to a sharp drop in demand for the most advanced EUV lithography machines. The market believes that the results announced by ASML may be an early warning for tech giants that will release financial reports in the future.
Just one day after ASML announced its earnings report, TSMC of Taiwan, the world's largest chip foundry, released mixed results. Benefiting from strong AI demand, TSMC's net profit in the first quarter increased for the first time in a year, but it lowered the growth forecast for the global wafer processing industry, causing the company's stock price to drop markedly, and heightened market concerns about overall technology stocks.
Some analysts point out that people seem to think the AI trade will always rise. It became crowded and is now retreating violently. This is a collapse of technology stocks. It is a withdrawal of capital from technology stocks, especially from popular artificial intelligence transactions.
Another analysis indicates that since the AI market started last year, there has been no particularly obvious correction in the entire sector or even US stocks; it can be said that it has been rising continuously for a year and a half. This adjustment is more likely to be a healthy correction. Big money will not easily leave the AI table. Next, we should pay close attention to Nvidia's performance and the capital expenditure of important technology companies this year. However, a new upward trend in the market will require incremental capital, which may require a new “grand narrative.”
Editor/Jeffrey