Without warning, Super Computer Micro (SMCI), which will post results this week, fell by over 20% last Friday. Confident bulls have no idea why the artificial intelligence super-computer supplier suddenly dropped.
The stock likely priced in expectations so high that fearful investors took profits. After watching firms like Netflix (NFLX), Proctor & Gamble (PG), ASML, and Taiwan Semiconductor (TSM) post strong results but fell, fears heightened. When non-tech firms reported strength but sold on the news, the AI bubble risked falling by more.
AMD (AMD) dropped by 6% while NVidia (NVDA) fell by 9% last Friday.
Watch ASML today. The quarterly earnings and fall in bookings do not justify the stock’s valuation. Taiwan Semiconductor (TSM), which failed to break out above $140 in 2024, lost over 12% in the last week. It reported revenue rising by 12.9% Y/Y to $18.87 billion.
Geopolitical tensions between Iran and Israel extend globally. China and Russia support Iran while the West supports the latter. TSM has significant risks with its operations in Taiwan. Intel (INTC) is one of many firms de-risking from China. It is building manufacturing plants in the U.S.
Your Takeaway
Watch out for TSM stock to pull back by 15% to 20% more in the coming weeks. If tensions among nations do not de-escalate, semiconductor stocks like Micron (MU) and Qualcomm (QCOM) may fall, too.
