Reward 500 Tiger-coinsHello. The last of this week's AI hardware papers came in overnight, and both were sold.
$Applied Materials(AMAT)$ earned US$3.50 a share, ahead of forecasts, grew revenue 25 per cent year on year, said AI-related demand hit a record, and guided next-quarter revenue above Wall Street expectations. It closed down 2.48 per cent and fell another 5.13 per cent after hours, to US$507.11.
$Coherent(COHR)$ was starker. Its report the previous evening beat on both lines — earnings of US$1.74 a share against US$1.6474 expected, revenue of US$2.046 billion against US$2.025 billion — and it closed down 7.99 per cent yesterday at US$327.23, giving back the whole of the prior day's 8.24 per cent and finishing below where it stood before it reported.
The biggest gainer of the day had not reported at all.
$SanDisk Corp.(SNDK)$ closed up 13.67 per cent at US$1,528.11, having touched US$1,580.88 intraday, a gain of about 17.6 per cent. What it held yesterday was an investor day, and what it put out was a model for financial years 2028 to 2030: revenue growth in the mid-to-high teens, a gross margin target of 80 per cent, and excess cash returned to shareholders. Goldman Sachs' analyst said it had set a high bar.
The rest of the chain came up with it: $Western Digital(WDC)$ closed up 7.31 per cent and $Tradr 2X Long SNDK Daily ETF(SNXX)$ rose 27.28 per cent in a day.
On one side, accounts already handed in. On the other, a drawing that runs to 2030. The market paid more for the drawing.
That is not the market losing its head. NAND as an 80-per-cent-gross-margin business is something that had never been in the price — it has always been valued as a cyclical. And SanDisk's shares were already down about 30 per cent from a June high near US$2,367, which had been priced still less.
Equipment is the other way round. $Applied Materials(AMAT)$ is up nearly 200 per cent over a year and trades on 51 times earnings. A beat and an above-consensus outlook are things that run has already paid for.
So yesterday is less of a puzzle than the day before it. On Wednesday evening Cisco beat on revenue and profit, booked record orders and guided above Wall Street forecasts, and still fell 4.07 per cent after hours; yesterday Applied Materials ran the same script again.
Neither time could I find an explanation that holds, and no report offers a reason. The one thing on view is that both share prices had already bought "it will be good" before the results landed.
What has already been counted is in the price. What nobody has counted yet is what gets chased.
The rest of memory came along. $SK hynix(SKHY)$ closed up 7.29 per cent after the SK group chairman said publicly that he was not worried about its dependence on Nvidia, and the sell side promptly published a "road to a US$1 trillion market value" call. Micron closed up 4.23 per cent, a day after regaining a US$1 trillion market value of its own. $CSOP SK Hynix Daily (2x) Leveraged Product(07709)$ rose 9.83 per cent and $Direxion Daily Semiconductors Bull 3x Shares(SOXL)$ 2.25 per cent.
The macro data was soft for a second day. July PPI was 4.7 per cent year on year, the lowest since March, against 5.5 per cent the month before and 4.9 per cent expected; it was flat on the month, with the core at 4.2 per cent year on year and 0.2 per cent on the month. $S&P 500(.SPX)$ closed up 0.65 per cent at 7,798.99, a record close, having traded above 7,800 during the session; $NASDAQ(.IXIC)$ Composite rose 0.81 per cent, $Invesco QQQ(QQQ)$ 1.16 per cent and $Dow Jones(.DJI)$ 0.13 per cent.
On the same day the index closed at a record, the most famous bear in the market was adding. Michael Burry's disclosed positions show him buying more QQQ puts and increasing shorts on Micron, Nebius and Oracle; he is reported to have called Nebius what the top of a boom looks like.
The interesting part is that the two he was short went different ways that day: $Micron Technology(MU)$ closed up 4.23 per cent and $NEBIUS(NBIS)$ down 1.60 per cent — and Nebius had surged 34.14 per cent only two days earlier. Two more of the hardest runners of the past two days also gave some back, $CoreWeave, Inc.(CRWV)$ down 1.34 per cent and $SpaceX(SPCX)$ 3.33 per cent.
The bulls are holding data and the bears are holding position. Neither is fake. They simply answer different questions: the data settles the next policy meeting, the position settles the next drawdown.
On the day equipment fell, though, servers and chips were still rising: $SUPER MICRO COMPUTER INC(SMCI)$ up 4.12 per cent, $Intel(INTC)$ 3.58 per cent and $Marvell Technology(MRVL)$ 2.35 per cent.
$Tesla Motors(TSLA)$ closed up 3.80 per cent. Swedish unions ended a strike that had run for close to three years after the company put a buy-out on the table, settling a labour risk that had been hanging over it for a long time.
$Palantir Technologies Inc.(PLTR)$ closed up 4.66 per cent, extending its post-results run, after Bank of America, JPMorgan and Oppenheimer all put it among their most-favoured AI names at the same time. Nvidia rose just 0.54 per cent, its own equity portfolio still undisclosed.
One more thing points one way while the share price points the other. The White House announced yesterday a 15 per cent ad valorem tariff on drones and drone parts from the European Union, Japan, Liechtenstein, South Korea, Switzerland and Taiwan, with 10 per cent on British-made units, taking effect 21 days after the notice. Follow the story and this should favour domestic American makers, yet Ondas closed down 8.80 per cent, the weakest of the drone names.
What the tariff blocks is imported finished units. What it raises is the cost of the imported components domestic makers buy. Both land on the same cost sheet, and which is larger depends on how localised a given supply chain is — a number the notice does not contain.
The accounts are all in, and not one of them bought a better price. The next thing due is Nvidia's own portfolio: where it puts its own money will say more than any guidance does.
The above is personal analysis, not investment advice.
💬 【Talking Point】
Burry loaded up on QQQ puts and added to his Micron short on the very day the S&P 500 closed at a record. Do you read the most famous bear in the market adding here as the warning, or as the contrarian signal?
💰 【Bounty】
Drop your view in the comments and there are coins in it for you! 🎁
🔔 Better shared than saved — tag a friend and split the coins!
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