Morning Commentary
The Artificial Intelligence (AI) trade stumbled yesterday, resulting in Utilities (XLU), Technology (XLK), and Communication Services (XLC) bringing down the S&P 500 (SPX)—nothing catastrophic, but a signal of bumpiness ahead.
The biggest winners changed hands at valuation metrics that made purists scream.
Small Came Up Big
I know there have been so many small-cap head fakes, but I like the bounce off key moving averages, but there is more work to do.
The Institute of Supply Management (ISM) Services PMI is still in expansion, but the number was troubling.
Exports and imports slowed to contraction, while prices are climbing faster.
The Treasury auction was sloppy.
And tariffs on Switzerland caught them and the market off guard.
Earnings Landmine
Earnings misses have been severely punished, and the beating went on after the close.
Slammed:
The thing about these initial reactions when the market is trading at specific valuations and individual names are much higher is that it might just be the chance for investors to take some chips off the table. Still, it can also be red flags, which is the case with SMCI and AMD.
Not the end of the world, but time to reassess.
Today’s Session
The data center build-out race is on and it’s moving at breakneck speed.
The question is, why are two darlings of the AI world under pressure after posting quarterly financial results?
SMCI
Management is pointing to margin pressure from larger deals and tariff issues but expressed optimism over the new DCBBS rollout.
Only one firm on the street has lowered their rating, which is very interesting. Most firms raised their targets, but they were below yesterday’s closing level.
The reaction in the share price, coupled with past issues with management and reporting delays, makes us leery.
Technically $46.00 must hold or there could be a lot more damage.
AMD
Data center revenue -13.5% from the prior quarter and is now down in back-to-back quarters. On a year-to-year basis, it went up only 14% versus last June quarter when data center revenue climbed 115%.
This has become everyone’s favorite AI play of late. The CEO gets the benefit of the doubt, so let’s see if buyers show up. Of course, I will be watching Dell Technologies Inc. (DELL) and Nvidia (NVDA) as well.
Utilities (XLU) are looking great following Centrus Energy (LEU) results.
Earnings are getting pretty good outside of tech.
McDonald's Corporation (MCD) rocketed on the same international store growth.
Uber Technologies, Inc. (UBER) wasn’t earthshattering, but another rah-rah interview with the CEO that helped to alleviate slight downward pressure.
The Walt Disney Company (DIS) is getting more attention from acquisition news than its financial results.
Tweet |
10/6/2025 1:36 PM | AMD deal powers Semiconductors |
10/6/2025 9:42 AM | ROTATION HAS BEGUN |
10/3/2025 1:30 PM | Midday Air Pocket |
10/3/2025 9:33 AM | MUSCLE MEMORY & AI FRENZY |
10/2/2025 1:34 PM | Searching for Direction |
10/2/2025 9:47 AM | A HEALTHY ROTATION |
10/1/2025 1:29 PM | Shutdown Resolve |
10/1/2025 9:45 AM | FINTECH MAKES ITS MOVE |
9/30/2025 1:47 PM | Shutdown Clock Ticks |
9/30/2025 9:52 AM | THANK YOU, SEPTEMBER |
9/29/2025 1:43 PM | Technology Turning Back Online |
9/29/2025 9:43 AM | Buy the Dip & March of the Federal Reserve Talking Heads |
9/26/2025 1:31 PM | Modest Gains |
9/26/2025 9:39 AM | GOOD NEWS HITS HARD |
9/25/2025 1:42 PM | Consolidation Phase |
9/25/2025 9:27 AM | Softness |
9/24/2025 1:29 PM | Mega Cap Profit Taking |
9/24/2025 9:35 AM | POWELL POKES |
9/23/2025 1:19 PM | Buying America |
9/23/2025 9:40 AM | THE HYPE IS NO JOKE |
9/22/2025 1:35 PM | Exhibiting Resolve |
9/22/2025 9:36 AM | CONSOLIDATION IS NOT THE END OF THE PARTY |
9/19/2025 1:39 PM | Heading for a Strong Week |
9/19/2025 9:39 AM | Another Lesson in Panic |
9/18/2025 1:23 PM | Rate Cut Rally |
More commentary archives |
Home |
Products & Services |
Education |
In The Media |
Help |
About Us |
Disclaimer | Privacy Policy | Terms of Use | All Rights Reserved.
|