On Friday, April 19th, "ten-bagger stock" Super Micro Computer (SMCI) plummeted over 20%, with the stock price closing down 23%, hitting a new low in over two months.
Super Micro Computer stated in a brief press release on Friday that it would announce its third-quarter financial results on April 30th. However, the company broke its previous practice of providing preliminary performance, which triggered investor concerns and led to a frantic reduction in the stock.
Looking back to January of this year, Super Micro Computer raised its sales and profit guidance 11 days before announcing its second-quarter financial report. The impressive performance forecast violently lifted Super Micro's stock price and also propelled the latest surge in AI concept stocks in the first quarter of this year.
The market generally believes that Super Micro's failure to provide a positive pre-announcement is considered negative, especially at a time when the focus is on the important field of artificial intelligence, which exacerbates market concerns. If the performance is outstanding again, they are likely to say something, so it is worrying.
It should be noted that Super Micro did not respond to media inquiries on Friday.
An analysis article mentioned another situation: there are increasingly more so-called Super Micro direct-signed H100s, which have always existed, but now the delivery times are getting shorter, 1-1.5 months.
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Super Micro produces computers and sells them to enterprises for website servers, data storage, and AI training. NVIDIA, NASA, and Japanese Electric are all its partners. The main reason for the surge in Super Micro Computer's stock price in recent years is the market's strong demand for its servers (infrastructure for AI chips). For Super Micro, it doesn't matter who wins the AI competition. Because if you buy AI chips, whether from NVIDIA or other companies, you need to connect and cool the chips — this is where Super Micro comes in.
Super Micro Computer was one of the most eye-catching tech stocks in 2022 and 2023, with a surge of 246% last year and an increase of 87% the year before. Super Micro's plummet on Friday made it the company with the largest drop among the S&P 500 index constituents on that day, having just joined the S&P 500 index last month. As of Friday's close, Super Micro has fallen more than 40% from its high this year, but still has an approximate 150% increase for the year.
Super Micro also dragged down a host of tech stocks, including NVIDIA, with chip stocks and AI concept stocks being the hardest hit, suffering a miserable decline on Friday. These tech companies did not release any news that could lead to a stock price plunge.
NVIDIA plummeted 10% on Friday, marking its largest single-day drop since the early days of the COVID-19 pandemic in 2020, with its market value falling to $1.9 trillion during the session, hitting a two-month low. Since last October, NVIDIA's closing price has never been below the 50-day moving average, which is a key technical level. The NVIDIA double long ETF fell 20%. "NVIDIA concept stock" SoundHound fell by more than 7%.In other significant tech stocks, Arm fell nearly 17%, AMD dropped over 5%, Meta declined by more than 4%, Intel fell by 2.4%, and both Microsoft and Apple fell by over 1.2%.
In fact, this is not the first time that AMD has caused a collapse in AI concept stocks like Nvidia. In August last year, AMD plummeted by over 23% in a single day, which also dragged Nvidia down by nearly 5% on the same day.
The NASDAQ was also affected, plunging by more than 2%, continuing its recent downturn and forming a stark contrast with the Dow Jones, which was still rising on the same day. Technical indicators show that the NASDAQ has clearly entered an oversold phase. However, it should be noted that a technical oversold condition does not necessarily imply a rebound will follow.
The accelerated decline of semiconductor and AI tech stocks this week began with the earnings report of ASML, the highest-valued technology company in Europe. ASML's total new orders in the first quarter were significantly lower than expected, with a sequential decrease of 61%. Previously, in the fourth quarter of 2023, its order value set a record. ASML explained that the decline in new orders was mainly due to a significant drop in demand for the most advanced EUV lithography machines. The market believes that ASML's reported performance may serve as a warning for tech giants that will release their earnings reports in the future.
Just one day after ASML's earnings report, TSMC, the world's largest semiconductor foundry based in Taiwan, released a mixed earnings report. Benefiting from strong AI demand, TSMC's net profit increased for the first time in a year in the first quarter, but it lowered its global wafer foundry industry growth expectations, causing a noticeable drop in the company's stock price and intensifying market concerns about overall tech stocks.
Some analysts have pointed out that people seem to believe that artificial intelligence trades will rise indefinitely. It has become crowded and is now experiencing a sharp pullback. This is a collapse in tech stocks, with capital withdrawing from tech stocks, especially from the hot artificial intelligence trades.
Another analysis points out that since the AI trend started last year, the entire sector, and even the US stock market, has not experienced any particularly significant corrections, and 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, and large funds will not easily leave the AI table. The next focus should be on Nvidia's performance and the capital expenditure situation of major technology companies this year. However, the market will need incremental funds to move upward again, which may require a new "grand narrative."
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