To The Moon

The weakness in semiconductor related stocks brought impact to the decline in index levels. We saw initial drop in the semiconductor sector followed a Bloomberg report indicating that the Biden administration is considering restricting sales of advanced AI chips to certain countries, particularly in the Persian Gulf.

S&P 500 was down -0.76%, NASDAQ and DJIA also closed with significant losses with -1.01% and -0.75% respectively, while Russell 2000 managed a slight gain of 0.1%.

Investors also reacted to earnings reports from major companies. UnitedHealth (UNH), the largest component in the price-weighted DJIA, negatively impacted other health care stocks, with the S&P 500 health care sector declining by 1.2%.

Earnings reports from financial sector companies like Goldman Sachs (GS), Bank of America (BAC), and Citigroup (C) were also released, with the financial sector settling 0.3% higher despite mixed reactions to the quarterly results.

Upcoming Economic Data On Wednesday (16 Oct)

Today's economic data included the October NY Fed Empire State Manufacturing index, which came in at -11.9, against a consensus of 2.0, down from a prior reading of 11.5.

Semiconductor Sector Intensified Selling After ASML Q3 Results

The semiconductor sector experienced intensified selling after ASML (ASML) released its Q3 results, which fell short of investor expectations with below-consensus EPS, revenues, and net bookings. The company also offered weaker-than-expected FY25 revenue guidance, stating that while AI developments are strong, other market segments are slower to recover.

This news significantly affected semiconductor stocks, including $NVIDIA Corp(NVDA)$ contributing to a 5.3% decline in the Philadelphia Semiconductor Index (SOX).

Energy and Information Technology Brought Down By Semi and Oil stocks

We saw Energy sector lost 3.04% due to the declines in oil and energy stocks, and information technology sector was down -1.79% making it the second lagger sector.

Semiconductor sector intensified selling after ASML released its Q3 results which fell short of investor expectations.

Note Yield Was Mixed As Investors Grapple With Rate Cut Expectations Reset

The 10-year yield increased by four basis points to 4.042%. The 2-year yield decreased by two basis point to 3.954%.

Stocks To Watch

ASML Holding (ASML) saw its stock plummet 17% after releasing a tighter forecast for 2025, attributed to stricter export controls in the Netherlands impacting its market for EUV Lithography. The company narrowed its revenue outlook from €30-40B to €30-35B, with lower margins due to reduced economies of scale. The Dutch government’s recent actions have necessitated export authorizations, affecting ASML's business significantly.

Meta Platforms (META) has teamed up with Arista Networks (ANET) to deploy a new Ethernet-based AI cluster, utilizing Arista's 7700R4 Distributed Etherlink Switch for scaling large language models. Despite the collaboration, Arista's shares fell 5% amid concerns over Meta's latest switch announcement. Analysts from Wells Fargo believe these concerns are misplaced and maintain an Overweight rating on Arista with a $390 price target.

$Alphabet(GOOGL)$ announced its cloud servers are now running on Nvidia's (NVDA) Blackwell line. This collaboration aims to build sustainable compute infrastructure, with Google joining the ranks of OpenAI and Microsoft (MSFT) in adopting Nvidia's advanced GPUs. Nvidia's CEO highlighted the high demand for Blackwell GPUs, with positive remarks from Morgan Stanley and Wells Fargo.

If we looked at how GOOGL have been trading, I would say that MACD does not give much confidence as it is showing a bearish downside, but GOOGL have moved above the short-term and long-term MA, giving an uptrend on the MTF.

So I would suggest that we continue to monitor how GOOGL would be trading as this stock might be a potential winner in the AI race.

I am holding onto my position for GOOGL for long term. I believe the AI race winner would be much clearer after we see the final earnings in 2024.

Super Micro Computer (SMCI) is launching new AI servers powered by Nvidia's latest Blackwell processors. These liquid-cooled servers are expected to enhance computational power and energy efficiency. Super Micro has started sampling these servers, with full-scale production slated for late Q4, showcasing its expertise in deploying advanced AI infrastructure.

Exxon Mobil (XOM) plans to sell part of its assets in North Dakota's Bakken shale, seeking at least $500M. The sale includes both operated and non-operated wells, with much of the land undeveloped, potentially attracting buyers. Exxon is a leading producer in the Bakken, with significant daily production from the region.

$Celsius Holdings, Inc.(CELH)$ reported a 5.6% increase in sales growth over a recent four-week period, with volume up 11.6% despite a 6% price decline. The company's market share has remained stable, though increased promotional activity by competitors has impacted its value share. Analysts note a slowdown in market share gains due to competitive pressures.

I would think we need to exercise caution on CELH, though MACD show that it is moving in an upside trend, but the short-term and long-term MA suggest that it is weak as it has been trading below both for quite a long time. This also give a down trend from the MTF.

I would monitor and wait for CELH to trade above the short-term MA, then we might see a bullish reversal.

UnitedHealth (UNH) shares fell after setting a conservative 2025 earnings outlook, below Wall Street expectations. Despite in-line 2024 guidance, the company's CEO cited impacts from Medicare and Medicaid-related factors, including payment cuts and regulatory changes, as reasons for the cautious forecast.

Lam Research (LRCX) was the most shorted stock in the information technology sector in September, with a short interest of 24.65%. Super Micro Computer (SMCI) and Enphase Energy (ENPH) followed with significant short interests, reflecting investor skepticism partly due to reports from short-sellers like Hindenburg Research.

Summary

The intensified selling on the semiconductor after ASML earnings might continued, but I am expecting banking stocks to make a gains today (16 Oct) as we are going to have more investment banks reporting their results.

So financial sector might be something we can look at today (16 Oct).

Appreciate if you could share your thoughts in the comment section whether you think market is going to experience intensified selling on the tech stocks or financial stocks would help to smoothen the impact.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.