AI madness - Correction next week?
AI and Semiconductor
As we observed, semiconductor and AI-adjacent tech stocks surged this week following a fourth-consecutive earnings beat-and-raise from AI leader Nvidia.
Nvidia blew past analyst estimates with fourth-quarter earnings of $12.29 billion on $22.1 billion in revenue.
Without doubt, Nvidia will become the dominant ecosystem in the computing industry.
SMCI
Zooming in to another AI meme, shares of Super Micro Computer (SMCI), the data center technology company that has seen its shares triple in value this calendar year alone, jumped more than 25%, exceeding even Nvidia post-earnings gain.
Super Micro Computer specializes in advanced computing solutions for data centers, cloud providers and enterprises.
Recent years, SMCI has become a key player in manufacturing computers tailored for data center use, supporting functions like website hosting, data storage and AI applications.
Operating in over 20 countries, SMCI has achieved global prominence, boasting strong financial performance marked by steady revenue growth, a healthy profit margin exceeding 10% and stable debt levels. With favorable valuation metrics compared to industry peers, SMCI solidifies its position as a reliable and financially sound technology partner.
Trend of AI stocks
Without doubt, AI stocks are still in the mid stage of growth, the peak definitely has not reached yet. But then, it is hard to predict when will be the peak. It's advisable that investors invest wisely and rationally in AI stocks.
Given the massive rally since few months ago, many AI stocks surge over 50% year to date. I do expect the market to have some minor correction before next rally.
Why? Let's look at the technical chart below, for SMCI. The stock seems to face a short term double top resistance at around 1000 USD. The first top is followed by a big bearish engulfing candle with significant volume. Last night, the share pullbacked to EMA10 again. It will not be surprise to see the stock further corrected till EMA25 trend line support.
It's hard to say whether this is a meme buy or AI future. I think it might be a mix of both at this stage.
SMCI chart
Next, let's look at the technical chart for NVIDIA. The daily candlestick showed a potential shooting star in an uptrend which might signify a potential retracement. Any pullback to 650-700 USD range is considered healthy given the massive rally since January 2024.
NVDA chart
In a nutshell, even the AI field still growing fastly with promising future, but it is unavoidable to have some healthy retracement before going for another wave of surge. Let's wait patiently! For the moment, based on the technical, I expect the AI theme to be bearish for short term, $NVIDIA Corp(NVDA)$
Do you share the similar point of view? Come and leave you comments below! All the best in your investment journey too.
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- Aqa·02-25Liked and shared.1Report