WEBVTT 00:00:00.000 --> 00:00:06.520 It's been a tough week for tech, especially in the chip space and the latest contender 00:00:06.520 --> 00:00:10.760 today, Supermicrocomputer, the server company, under pressure. 00:00:10.760 --> 00:00:13.680 It's sliding because it didn't pre-announce results. 00:00:13.680 --> 00:00:16.160 It usually does, or at least the market expects it to. 00:00:16.160 --> 00:00:20.760 And this all coming after the broader semiconductor sector fell into correction this week on 00:00:20.760 --> 00:00:26.800 shifting expectations for rate cuts and disappointing results from ASML and TSMC. 00:00:26.800 --> 00:00:29.400 Joining us now is Bernstein Senior Analyst Stacy Raskin. 00:00:29.400 --> 00:00:34.600 Hopefully to put all of this in perspective for us, Stacy, it's great to see you. 00:00:34.600 --> 00:00:41.000 As always, there is nearly no one I would rather speak to on Semiconectors than you. 00:00:41.000 --> 00:00:44.560 So we got Nvidia down 9% today. 00:00:44.560 --> 00:00:46.640 What the heck is going on? 00:00:46.640 --> 00:00:52.160 I think with Nvidia it's probably just Supermicro dragging the whole semi-space down and the 00:00:52.160 --> 00:00:54.560 AI names are getting hit worse. 00:00:54.560 --> 00:00:55.560 They didn't say anything. 00:00:55.560 --> 00:00:58.000 They didn't report earnings for another month, frankly. 00:00:58.000 --> 00:00:59.240 I don't think it's more than that. 00:00:59.240 --> 00:01:02.320 But if you look at the industry as a whole, you're right. 00:01:02.320 --> 00:01:04.720 Things are starting to move more into a correction phase. 00:01:04.720 --> 00:01:09.360 We had reports from players like ASML and TSMC. 00:01:09.360 --> 00:01:14.200 You have to remember outside of AI, AI is very strong right now. 00:01:14.200 --> 00:01:17.520 The rest of the semi-industry this year is not all that great. 00:01:17.520 --> 00:01:20.840 PCs and smartphones, they've probably hit bottom. 00:01:20.840 --> 00:01:23.560 I don't think they're getting any worse, but they're not necessarily getting a 00:01:23.560 --> 00:01:25.880 ton better right now. 00:01:25.880 --> 00:01:29.120 Data center spending outside of AI is actually quite weak. 00:01:29.120 --> 00:01:32.640 Server CPUs and networking and that sort of thing is quite weak. 00:01:32.640 --> 00:01:34.440 Industrial and markets have been very weak. 00:01:34.440 --> 00:01:36.440 Automotive, TSMC called this out. 00:01:36.440 --> 00:01:39.160 Automotive is now starting to roll over potentially. 00:01:39.160 --> 00:01:43.600 And so I think just broadly for the industry, especially given how strong it was last 00:01:43.600 --> 00:01:47.400 year, it was very strong year to date until recently. 00:01:47.400 --> 00:01:50.120 Valuations in the sector have been very high as the stocks have held up very 00:01:50.120 --> 00:01:51.720 well amid estimate cuts. 00:01:51.720 --> 00:01:55.800 I mean, I guess part of me is not incredibly surprised that things are taking a little bit 00:01:55.800 --> 00:02:01.120 of a breather as we get ready for earnings, which kicks off like in a big way next week. 00:02:01.120 --> 00:02:04.240 So Stacey, talk to me about the timeline then for this breather. 00:02:04.240 --> 00:02:05.240 Where are we at? 00:02:05.240 --> 00:02:07.080 Are we at the beginning of this cycle? 00:02:07.080 --> 00:02:08.080 Are we at N8-1? 00:02:08.080 --> 00:02:09.080 Are we at N8-7? 00:02:09.080 --> 00:02:11.240 You know, it's funny. 00:02:11.240 --> 00:02:14.840 So a lot of these companies have actually been cutting numbers for a while. 00:02:14.840 --> 00:02:15.840 Like it's not new. 00:02:15.840 --> 00:02:19.560 So like PCs and smartphones, I think we're through most of it. 00:02:19.560 --> 00:02:22.240 The question now is on like the pace of the recovery. 00:02:22.240 --> 00:02:26.520 But some of the analog, like the industrial and the auto, some of these companies like 00:02:26.520 --> 00:02:30.400 Texas Instruments and some of their peers have already been cutting numbers for three, 00:02:30.400 --> 00:02:31.920 four, five quarters in a row. 00:02:31.920 --> 00:02:34.400 Like it's not like it's new. 00:02:34.400 --> 00:02:38.440 The stocks like I said have held up very, very well amid estimate cuts. 00:02:38.440 --> 00:02:42.120 But the semiconductor investors in general like to buy estimate cuts that they believe 00:02:42.120 --> 00:02:45.120 that the bottom is in. 00:02:45.120 --> 00:02:47.080 Usually the stocks go down first though. 00:02:47.120 --> 00:02:51.640 Like in many cases over the last six months amid some fairly sizable negative 00:02:51.640 --> 00:02:53.520 revisions, the stocks just haven't gone down. 00:02:53.520 --> 00:02:54.880 They've held up very, very well. 00:02:54.880 --> 00:02:58.720 And so I think if you're asking where are we in terms of like the numbers cuts, 00:02:58.720 --> 00:03:02.120 hopefully we're closer to a bottom to the end of it than the beginning. 00:03:02.120 --> 00:03:03.640 It's been going on for a while. 00:03:03.640 --> 00:03:06.880 For the stocks though, like I said, the stocks have held in remarkably much 00:03:06.880 --> 00:03:10.200 better than I think they ordinarily would in a typical cycle. 00:03:10.200 --> 00:03:12.720 And like I said, maybe we're starting to see a little bit of a delayed 00:03:12.720 --> 00:03:14.920 reaction, but some of it's happening. 00:03:14.920 --> 00:03:16.840 There'll be some bellwethers that report next week. 00:03:16.840 --> 00:03:19.880 Texas Instruments is kind of the first large diversified guy that reports. 00:03:19.880 --> 00:03:21.240 They're on Tuesday next week. 00:03:21.240 --> 00:03:25.640 Intel and my coverage reports on Thursday will get a better view on PCs and 00:03:25.640 --> 00:03:28.200 servers and those kinds of broader markets as well.