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