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Sara Awad, from Tech Stock Pros, returns to discuss the volatile and stressful tech sector (1:30) Negative thesis on Nvidia (5:30). Do earnings calls matter? (12:50). CoreWeave’s green flags, upcoming earnings (22:10). Palantir update (24:40). Why Tesla is a tricky stock (26:20). Downgrading and upgrading AMD (32:30).
Transcript
Rena Sherbill: Sara Awad from Tech Stock Pros and the investing group Tech Contrarians on Seeking Alpha, welcome back to Investing Experts. Always great to talk to you.
Sara Awad: Thanks for having us. It’s great to be here. It’s always a pleasure to be on the podcast.
RS: It’s mutual. And like I mentioned to Sara before we hit record, your last appearance on our podcast is our number one most downloaded podcast of the past twelve months. I think that also signifies how much interest there is, also curiosity and wonder about what’s happening in the tech space given all this market volatility, given this tariff talk, given this uncertainty that we find ourselves in.
Bring us into the current moment. We saw China, US tariffs get some space to figure that out. They’ve been given some time to figure that out. So talk to us about where we’re at. What does this mean for the tech names? What does this mean for how you’re approaching things?
SA: So things have been really volatile since we last spoke. Everything that happened in April, it’s really been a roller coaster. It’s been an exciting one, but it’s also been a stressful one. So there’s a lot happening in tech overall and a lot happening very fast over a short time frame.
So I think it’d be a great point to just start kinda walking through this timeline since so much has happened. So we had April, we had Trump announcing the reciprocal tariffs, the market selling off into the weekend. And then we had April 9 come around. Trump pauses for ninety days on everyone but China. And then you have Trump raising tariffs with China and this back and forth kind of ping pong game.
And then April 13 comes around. You have the US administration granting an exclusion to smartphones, to computers, to other components of tech. And I think that was a big turning point in how we were looking at how this tariff situation is gonna play out because what that exemption told us is basically that the Trump administration understands or has a better understanding of the tech supply chain.
They understand that you can’t tariff China that high and not expect to have repercussions on US companies, American companies.
I mean, take a look at Apple (AAPL), for example. Apple is one of the most harmed people when prior to this smartphone exemption. And the reason why is because your standard iPhone, we think about it that most iPhones, I think, four out of every five are made in China, but that doesn’t mean that China’s making a lot of bank on these phones.
The people making money in terms of billable material costs are really US companies. So we’re talking Broadcom (AVGO), Skyworks (SWKS), and a bunch of other names that really make the components that go into this iPhone and that are making the most profit of it.
So that exemption told us that, yeah, Trump understands that tech needs to be exempt. There needs to be a differentiation of tech and nontech for whatever that is worth.
And then we follow through on the the the week following, Trump announces that there’s this new licensing agreement when it comes to the H20 and China’s access to advanced AI tech.
And then we have NVIDIA (NASDAQ:NVDA) and (AMD) kind of writing off 5,5 billion for NVIDIA, 800 million for AMD, which are not low numbers when it comes to these guys, and a sell off from there. After that, you go into this whole talk about probing the national security probe into the the idea of looming tariffs, threat from China getting access to advanced semiconductors and kind of looking into what bracket they wanna put semis in terms of tariffs now.
And then, we enter May. And then in May, we have this roller coaster of more tariffs, tariffs on American movies, we have tariffs on from the Trump administration placed on changing around the Biden administration’s whole AI diffusion framework when it comes to to the semi export ban.
And then finally, yesterday, we have this massive relief. We have tariffs cut between China and the US. Down to 30% on China and 10% on the US. And and there’s this relief rally. Right? And that continues today with with Trump and Riyadh and Jensen and Elon Musk and even, you know, all the big tech names.
Everyone’s gathered there in this deal about Saudi Arabia buying chips from NVIDIA and the most advanced Blackwell series chips. And NVIDIA is rallying now. At last I checked, it was $129, and I think it might have broken into the 130s range. We’re still around $129.57. So, basically, what we we think when it comes to this moment in time is that the relief rally is good.
It was expected that things would calm down between the US and China because those tariff rates were too high to be sustainable without having very severe impact. And there still could be impact from the ocean shipments that got halted. We still could see impacts even after this ninety day period, even if tariffs remain suspended.
But when it comes to NVIDIA now, I think that’s the main name everyone is getting excited about, especially with what happened in terms of making a deal with Saudi Arabia.
But we think that at current levels with NVIDIA up over 10% over the past five days, over 11% over the past months, there’s still a lot of excitement that this is NVIDIA’s comeback moment.
And we don’t think we’re there just yet. So that’s where we’re looking at in terms of in terms of AI and NVIDIA leading the group there. We think NVIDIA could still see a higher risk on their prints due May 28.
We think they could guide lower for the July because there’s a lot of risks that still haven’t played out, that still haven’t been factored into the stock and factored into Wall Street’s expectations for NVIDIA. So that’s kind of what we’re thinking about at the moment.
RS: So how would you expand upon the concerns around NVIDIA? How would you lay them out?
SA: For NVIDIA, you know, NVIDIA is the industry go-to. When it comes to to AI servers, they really do dominate the industry.
The estimate is that they have somewhere between 70 to 95% of that market. We think that’s weighted even more towards the higher end of the 95% of the market.
And, they’ve been printing numbers as the industry go to. Q4, they grew their data center sales by 16%, Q3 by 17%. And if you go back every quarter over quarter, we’ve seen sequential growth.
And Wall Street is guiding for them to have this kind of hyper growth continue. The whisper numbers for this year are that they’re gonna hit somewhere between 220 to 250 billion, which is a massive number.
Because we’re talking about over 90% increase from what they did last year when it comes to data center sales where they printed I think it was around a 115 billion.
So Wall Street is guiding for them to keep not only growing, but to keep growing faster and faster. And, NVIDIA is the industry go to.
We haven’t seen any of the tier one guys, Meta (META), Microsoft (MSFT), or Amazon (AMZN), or Google (GOOG) (GOOGL) cut CapEx guidance, even though there’s been some reports about Microsoft pausing data center leases, and some regarding Amazon too.
But when it came to the conference calls this quarter, everyone really held on to that CapEx for the year. And Meta even upped that CapEx from 60 billion to 65 billion to the range of 64 to 72 billion. That’s not a slight increase.
So everyone’s still holding on to this this momentum coming back, NVIDIA doing better. Although the companies that are the tier one guys that most of their dollars spent go to NVIDIA are still holding on to that CapEx number.
But at the same time, we think that the logic in the market now is, okay, everyone’s spending. Why do we care? Why not buy NVIDIA and sleep like a baby at night? Nothing is gonna go wrong. That’s where we think people – the logic is wrong.
We think NVIDIA is a stock that you can’t buy and and go to bed at night and not worry about it anymore. NVIDIA isn’t what NVIDIA was a year ago or two years ago even.
The ASIC coming in next year, that could be a kind of a threat to that market share because we’ll see more inferencing workloads move over there. At the same time, when when it comes to the near term, when it comes to the July outlook, we think there’s a higher risk there, and there’s three specific reasons that we see that higher risk.
The classic one, which is double ordering. So when you are in a shortage within the tech supply chain, especially with the semis, whenever there’s a shortage, we say this to our investors behind the paywall, and I’ll say this to you now, whenever there’s a shortage, more often than not is double ordering.
And it’s just the logic of the supply chain. If there’s something that I need to get my hands on, and I’m not sure if there’s enough supply of this, until supply meets demand, I’ll order more than I actually need to guarantee that I get a slice of the cake.
So when it comes to Blackwell, Blackwell is in shortage. Hopper was in shortage at some point with very long lead times, and everyone was double ordering. So we think double ordering is gonna slow down once supply meets demand.
So once the Blackwell ramp is over and Blackwell is no longer in shortage, there’s gonna be less of this gold rush to get your hands on a Blackwell.
At the same time, there’s gonna be more patience from the customer end because customers are gonna wanna wait, keep their dollars, and get their hands on Ruben next year.
Because we know that NVIDIA kinda laid out the road map for the next couple of years. So they know what’s coming. So they wanna make sure that they have their funds targeted at the newest, highest end GPU that’s coming out of NVIDIA.
So we think that this double ordering could show up on the July outlook, not as a decline in sales necessarily, but just as a slower growth pace than what the market has been used to and what NVIDIA’s kind of trained us all to look for when they print.
I mean, even last quarter, they printed really good numbers. They beat guidance. They beat for the quarter, and the stock still sold off because there’s this panic of when will the other shoe drop, when will the sales growth pace kind of slow down.
And so we think that that higher risk profile will likely play out on that July quarter outlook. So it really depends on what Jensen is guiding for that July, and we think it’ll be lower than the what the market is expecting given, number one, the double ordering, and number two, given actually the data point that came in earlier from Super Micro.
Super Micro (NASDAQ:SMCI) third quarter results, they had their preliminary results out. They actually lowered their preliminary results for Q3.
And then when they reported Q3, they missed expectations. And they guided lower for the Q4 quarter, and they dragged down their full year outlook, which ends at June 30. They guided down for that full year again, which they had already done in February.
So we’re talking about Super Micro guiding down in February, missing for the Q3, guiding lower for Q4. And the reason why is because they said, hey, guys. We have a lot of old generation inventory that we’re not able to get off our hands because there’s some delay in customer decision making because of all the uncertainty.
But what we think this really tells us is that, hey. Listen. No one wants Hopper as badly as they did before. So we have a bunch of inventory that we’re not able to get off our hands. And at the same time, if you take that data point and you put it side by side with NVIDIA’s write down of $5.5 billion you think, okay. Could there be something here that that we can connect?
Is NVIDIA also writing off inventory from the Hopper series, not only the H20s that go to to China because that’s how the supply chain thinks. If you have surplus inventory, you you wanna get rid of it. You don’t wanna keep it on your hands. And so we think that that $5.5 billion write down in light of what Super Micro told us could indicate that, yeah, NVIDIA also has more Hopper series that they need to write off.
Because if you take 5.5 billion and you add to that NVIDIA’s gross margin, which is, 73% now, lower than it was a quarter ago, lower than it was a year ago, but 73% is still pretty high. So if you take that 73% and you assume that 5.5 billion is just the cost of of the goods they’re selling, you add that 73%, then you’re talking about around 20 billion in potential sales that they’re writing off.
So we think that 20 billion % of sales is a bit fishy to to assume that was all just going to China. We think that could also have some Hopper written off in the mix from circulating these different data points.
RS: We’ve had a lot of, or some disagreement between the Investing Experts, guests recently, Barry Ritholtz, J Mintzmyer, our Wall Street Breakfast podcast, in terms of the value of following these earnings calls, share with investors your approach to following guidance and earnings calls, especially in this moment where it appears that everything changes very, very quickly?
SA: That’s a great question. Basically, what we what we do as a team is that we take the larger peer group. So, for example, you have the tier one guys, you have the AI server suppliers, you have Dell (DELL), you have (HPE), you have Lenovo (OTCPK:LNVGY). You have Super Micro. You have a bunch of other names.
And we put all this data together to paint the bigger picture, which is, in this case, about NVIDIA. But what we focus on in those earnings calls is basically what management isn’t telling us rather than what management is telling us.
So best example I can think of this is AMD’s earning call that happened earlier this month. Basically, on that call, Lisa Su is is a great CEO, but on that call, she avoided all the questions about AI GPU sales. So she gave us everything we wanted except a number about, hey. How much AI GPU sales are you guys actually making?
That’s a question that in the q and a section, you’ll notice everyone kinda tried to poke around to kinda get a number on. And the fact that management didn’t tell us that number tells us that there’s something wrong in our opinion.
So it’s not only about listening to their earning calls to understand what management is telling you, what their visibility is on the space, but in such a limited visibility time with all the tariff uncertainty, even up to yesterday, even today, because no one knows what’s gonna really happen, how this is gonna play out.
Even with the tariff uncertainty, what you what we care about most, what we watch for is what management isn’t talking about more than what they are talking about.
Another example that come to mind is basically TSMC (TSM). So TSMC talked on the earnings call, which was way earlier this this earning season, as they usually, you know, report earlier than the bunch. They talked about AI demand, and they talked about AI demand being good.
But at the same time, when they were asked about, you know, the packaging, the, the COWOS, last quarter or prior, they had said that there’s a surplus of demand and that they’re trying to, you know, make the capacity to to to meet the demand.
When they were asked about it this quarter by the same analyst in the q and a section, they said the demand was more manageable now.
So what we take from that is that, hey. That’s not necessarily means that you guys suddenly had an increased capacity to be able to match that demand, but that could be that demand is moderating a little bit.
So we take little bits and pieces from different earning calls, within the same supply chain, and we put those together to get a better idea about when demand is gonna kind of slow down before it shows up in print because that’s when we wanna make sure that our investors are outside of that stock.
And that’s why now we’re pretty bearish on NVIDIA prior to this print. So what we think is that right now at $129, NVIDIA offers opportunity for a great exit point more than an entry point.
And then we think after they print, Jensen could guide lower for July and then derisk the stock, and that’s when it’s the right time to jump back into NVIDIA for that run in momentum into the second half of the year.
But we need that kind of higher risk profile to be derisked because we’ve seen all these red flags from TSMC, from Super Micro, and from different companies in the mix.
RS: And what pokes holes in your NVIDIA thesis? What has you most concerned on the opposite side of your thesis?
SA: You you mean, like, what would the risk to our bearish call be?
RS: Exactly.
SA: That’s also a great question. Basically, the risk to our bearish call would be that they don’t guide lower.
And if they don’t guide lower, that means the ticking time bomb is just pushed out. So then it’s not the July outlook, then it’s the outlook for the second half of the year that is gonna have that higher risk profile.
Now we think that’s unlikely because of all the earnings coming through. But at the same time, if we’re playing devil’s advocate to our own investment thesis, if that does happen, we don’t think that derisks the stock.
We think that actually puts the stock at a higher risk profile because now the negatives are piling in, and that guide lower is gonna need to be much lower for it to really factor in the negatives into that outlook. So that’s the number one classic way that that we could have some risk on our thesis.
The other way is that, basically, if NVIDIA comes out and guides lower, but they also have something new to offer, investors kind of increase the confidence.
We see that constantly with Tesla (NASDAQ:TSLA). For example, this quarter, Tesla, you know, they missed numbers. They missed on deliveries. They had some of the worst auto sales that they had in a while, but the stock still traded up because Elon Musk said he’s gonna spend less time at DOGE even though he’s in Riyadh now.
So it really also depends on on what the the market is is looking for, what the market is hungry for. But when it comes to NVIDIA, I think this rally actually works in our favor because the stock is going up very fast on this hope that the momentum is back, that NVIDIA is what it was a year ago, two years ago.
But we think that these risks are still on the table. So sooner or later, these fundamentals need to show up. And what makes me even more sure about our concern is the third point and why we think NVIDIA is sell now and buy after that July quarter.
And this is a concern that might not show up on the July quarter, but will show up, I think, even into 2026, which is that Deepseek impact that we talked about on our first podcast.
So we saw everything sell off because of Deepseek on January 27. And we saw Broadcom drop, Monolithic Power (MPWR) drop, NVIDIA drop, AMD drop, really a broad sell off in one day.
But what we didn’t see is is the impact of Deepseek on the numbers. Because at the end of the day, Deepseek told us, hey, on the inferencing side of the business, you can do inferencing with much less compute power.
But the tier one guys, the hyperscalers still haven’t cut spend to kinda accommodate to that new data point that they that they have because no one wants to be trailing behind the bunch.
No one wants to take the risk of cutting CapEx spend and trying another way and ending up without a competitive edge, right, or ending up not able to monetize, all these hundreds of of millions that they’ve spent on AI because they decided to go a a cheaper way.
So the Deepseek thing is something that we still haven’t seen really play out, but that should play out sooner or later when it comes to AI. So that makes us more confident in this idea about NVIDIA needs to have this reset because expectations now are much too high for NVIDIA to really keep up the momentum that the market is expecting it to have.
So when it comes to Deepseek specifically, what we have noticed in terms of another data point is that there are signs that people are taking advantage of what DeepSeek has taught us in terms of having inferencing for lower computing power.
And where we see that is is in the gaming GPU sales of NVIDIA. So if you look at NVIDIA’s gaming GPUs, there hasn’t been a massive recovery in terms of end demand for gaming.
But still, NVIDIA’s gaming GPUs are sold out, specifically the ones with over 16 gigabytes of memory. And the fun fact to add there is that 16 gigabytes of memory is usually what you need to do to run AI models, to run LLMs. You need higher memory bandwidth.
So the fact that these GPUs are being sold out tells us something that maybe people are trying to use the gaming GPUs to do inferencing workloads. So that’s a data point. If we put this together with a broader idea that DeepSeek showed us that we still live in this post DeepSeek world, that could be a threat to NVIDIA that also could show up as the second half of the year progresses.
If NVIDIA does indeed guide lower for the July quarter, we think that’s not only a window to add NVIDIA stock, but it’s also a window to add some of our other favorite semis, which to walk through really briefly would be Micron (MU).
We’re big fans of Micron. We think DRAM is gonna continue to do well this year. And we think Micron is actually looking at an expanded visibility because, you know, Micron along with, SK hynix (OTCPK:HXSCF) and Samsung (OTCPK:SSNLF) really dominate the DRAM industry. And now we could see Micron getting more traction there.
I think if I’m not mistaken, there was news about Google going away from Samsung when it comes to HBM3E and moving maybe towards Micron because there were some issues with Samsung and NVIDIA’s verification. So that could be another tailwind for Micron.
And if if NVIDIA dips, on a a softer July outlook, then Micron could do very well as well.
Another name that comes to mind, which we’re big fans of is Broadcom because of Broadcom’s not necessarily the ASIC side of the business, but their networking side of the business. They should still keep seeing higher demand for the networking side of the business even if there’s a slowdown in terms of, let’s say, tier one CapEx for AI or even if NVIDIA sees a slowdown in growth. Broadcom should still be well positioned.
And that same kind of logic applies to Monolithic Power because they should also have content gain in future AI server generations. And the reason behind that is because the the power requirement is increasing as tech advances.
And Monolithic Power is well positioned, uniquely positioned, even, in our opinion, to leverage that for their own benefit and for the stock to go higher. Now these are stocks that are very pricey at the moment and have recovered quite a bit since their lows in the April. But we do think that there is still opportunity to jump in this stock if this NVIDIA kind of thesis plays out at the May.
RS: Broadcom was one of the stocks you were bullish on last episode. So your reasons for being bullish have only deepened since then?
SA: Yeah. And Broadcom’s been doing pretty well. I think over the past month, Broadcom’s up 31%. And this one month comparison, when we look at any of the semis or tech in general over the past month, everything is looking green mostly.
And that’s because if we’re comparing it to the first two weeks of April, there was so much volatility there, that everything is doing a lot well there. There’s a lot of recovery.
RS: Another name you were bullish on last episode was CoreWeave (NASDAQ:CRWV) fresh off its IPO. What are your thoughts there now?
SA: So for CoreWeave, we we covered core pretty closely. We were bearish when they first launched the IPO because we we thought that this there was gonna be another shoe that would drop quickly, and it did. The stock sold off quite a bit.
And then since then, it’s recovered, especially this week. So we’re still bullish. I think they wouldn’t have really gone for the IPO if they didn’t have a good pipeline. So for near term, we think CoreWeave is is worth it.
And then longer term mid to longer term, we think there’s this higher risk of, you know, the tech becoming outdated quickly, and and this need for upfront CapEx to keep filing through, which is a bit tricky when it comes to to rental prices going down over time and this need for consistent upfront CapEx to buy the newest generation, whether that’s Blackwell now or Rubin next year.
RS: So what are you looking for in terms of CoreWeave’s release? What are some things that would keep you bullish? What are some things that would leave you more concerned? And in terms of the tricky timeline playing out, what are some markers along the way that investors can take note of there in terms of understanding that stock a bit more?
SA: Because this is gonna be their first report since their IPO, there’s a lot that I think both we and Wall Street in general is gonna learn from from the report tomorrow. What we’re expecting to see is some so a strong pipeline.
We wanna see deals. We wanna see momentum in that front. Nebius has been doing really well, another NeoCloud company. Nebius has been doing really well to kind of up investor confidence to get the ball rolling there.
What we wanna see from Coreweave is that they have either increased funding to to be able to increase the number of of Blackwell, GPUs, in their lineup.
That would help them up the rental price. If they can up the rental price, then they should be showing a lot more revenue, have a better outlook.
And the other thing would be to have, you know, Microsoft, which was one of its top customers from what we know about CoreWeave so far, kind of increasing spend there for there to be development or signs of a sustained relationship when it comes to that because Microsoft has had so much, news around it since the beginning of the year about pausing data center leases and even news around it kind of slowing down with the CoreWeave in terms of of the deals that go through there.
So either either one of those would be a a green flag for us.
And then I think if the stock rallies post print, I think that might be a good opportunity depending on what’s said, depending on outlook. That might be a good opportunity to also explore exit points from that.
RS: Palantir (NASDAQ:PLTR) – what are your thoughts about Palantir these days?
SA: So Palantir printed pretty recently, and they printed well. They had good numbers, but the market reacted pretty badly after the print.
I’m not sure if if this number is accurate, but I think they dropped something close to 12% after print. And that was because the stock is a pricey stock.
It has premium multiples. And it’s priced for perfection. So any slip up is really unaffordable. But when it comes to Palantir, I think a lot of the good news was already priced in heading into print.
You know, the NATO deal, a lot of deals on the commercial front. So heading into print, there’s already the good news was baked into the stock. So it made that earnings report a lot less splashier or shiny, if you will.
But they’ve recovered quite a bit, and I think now they’re it’s another at around 128. So they actually have broken through their their fifty two week highs. So we’re still bullish on balance here, but we think price is everything when it comes to when to jump into balance here.
At current levels, it wouldn’t be a stock to jump into. You wanna buy low, sell high, not the other way around. But at current levels, a lot of the good news is already priced in. But there definitely will be a slip up again because this stock is so expensive and priced for perfection.
There will be a moment of investor panic, especially that this is a company that’s heavily owned on the retail side compared to the institutional front. So I think we will see better opportunities to jump into the Palantir.
We reiterated buy on that post earnings dip, and it’s up 18% since. So it’s been doing really well. That was May 6. And now around 128, we think it’s too hot or too risky to jump in at current levels, but there will be, in our belief, because of the history of how the stock moves, there will be better entry points.
RS: And Tesla’s (TSLA) a stock that you were bearish on. A lot of valid reasons to be bearish on that stock, valid reasons to be bullish on that stock. What are your thoughts about Tesla?
SA: So Tesla is a bit of a a tricky stock. You know, some people have called it a meme stock before, but that doesn’t rub everyone the right way, so we’ll avoid saying that.
But Tesla is a stock that generally doesn’t always respond to fundamental indicators. What I can say about Tesla is that in terms of of fundamentals, if we look at sales growth and momentum, what this quarter really confirmed is that Tesla is really is market share and its status as an industry go to worldwide is getting eroded.
Now the Chinese competitors are coming in with EVs that are much more affordable, that aren’t compromising on innovation for that affordability, places Tesla at a risky position.
So if Musk didn’t say that he’s gonna spend less time at DOGE on that last earnings call, I don’t think the market would have reacted the way that it did.
And even with what he said, I think the market was hungry for some kind of upside when it comes to Tesla because what he said wasn’t that, hey, I’m not gonna be working in the US government at all anymore. What he said is that I’m gonna be spending less days a week there, but he still is going to be spending time there every week. And that’s time not spent on Tesla.
So when it comes to fundamentals, if you look at the the auto sales, if you look at the the dropping sales in Europe even for the month of April, it looks like they’re gonna have more trouble next quarter when they’re reporting for for the current quarter in terms of of sales growth.
At the same time, the EV competition is something that I think is being overlooked too often when it comes to Tesla because the EV companies are coming in. They’re taking a lot of the share.
And when it comes to tariffs globally, although these company these EVs from China can’t really enter the US, they are gaining share around the globe, and they are definitely dominating the domestic market in China.
And while most people tend to forget while we talk about the stock market is largely US centered, what most people tend to forget is that China is really the biggest consumer hub or the consumer market for smartphones, for computers, for EVs as well.
So that’s an important market that Tesla needs to tap into. Now the only way we can see things reversing for Tesla, especially when it comes to the stock price, is if they’re able to pull off this Robotaxi in June.
If they’re able to pull that off, then we think that investors won’t care about lower sales growth. They won’t care even if expectations are missed again because there’ll be this new shiny catalyst coming out. That’s kind of where we’re standing on Tesla in terms of fundamentals.
All points indicate lower sales on their next print. But at the same time, because Tesla doesn’t move on fundamentals, if they’re able to pull off Robotaxi, then I can see the stock trading a lot higher.
RS: And then on your as I mentioned, you write on Seeking Alpha under Tech Stock Pros. Those are your free articles. And then Tech Contrarians is your investing group. On Tech Stock Pros, you’ve had a slew of recent buy articles on various stocks. Share with investors, if you would, about your changed thesis on Super Micro Computer.
Of course. Yeah. Super Micro, it was a it was a fun roller coaster with Super Micro. So they had those preliminary results out. The results told us was that, hey, guys. We’re gonna guide lower for Q3.
And then we ran the numbers. Stock reacted negatively, naturally, we’d assume it did. We ran the numbers. And at that point in time, this was when was this? This was early May, May 1.
At that point in time, Super Micro had told us for Q3, we’re gonna be printing somewhere between 4.5 to to 4.6 billion. So that was around a billion dollars lower than the market had expected.
Take what they printed for Q1, for Q2, for Q3, and then you look at their full year outlook, they would have to have printed 7.35 billion for Q4 for them to even hit the lower range of their full year outlook. And that’s the full year outlook that they already had lowered in February.
So based on that, we said, hey. It’s very unlikely that Super Micro is gonna print 7.35 billion for Q4 because for the past three quarters, Q1, for Q2, for Q3, they’ve been printing under 6 billion. So based on that, we initiated the stock with a sell because we thought, hey, they’re gonna cut guidance for the full year, once they have that earnings call next week.
And then a week came around May 7, and they had that call. It’s consistent with our expectations based on the fundamentals because we like to say numbers don’t lie, and, it’s treated us well in the past.
Based on the fundamentals, they guided lower for the full year, and the stock crashed even more, and that’s when we upgraded to a buy because the negatives at that point in terms of the near term negatives have been priced into the stock.
So when it comes to problems further into their full year ’26, those problems were relevant for this moment. For this moment, the negatives on the full year that ends at June 30 have been priced in. So we saw kind of a bounce back from there, and that’s that’s played out well with the stock up 23% since, versus the S&P 500 up 5%.
Another interesting data point speaking of, Super Micro is that there’s a lot of talk about Super Micro. I’m not sure if you caught these rumors, but there’s been a lot of rumors about Super Micro being part of the whole smuggling NVIDIA AI GPUs into China.
And there’s been some chatter about that back and forth, some videos of companies in China kind of showing the latest, H100, H200 GPUs that are banned from China within Chinese factories with delivery boxes that have Super Micro’s logo.
So there’s been a lot of chatter around where Super Micro’s sales go. So we think part of that issue of the lowered guide for Q3 that happened suddenly just after they lowered guidance last quarter could be based on this stricter choke hold that US is having on China’s access to tech and that pressuring Super Micro’s customer base.
Not fair to NVIDIA if we don’t discuss AMD too. So AMD is actually a stock that we were bearish on since the beginning of the year, and then we switched around after our thesis played out for the most part. We were bearish. We downgraded AMD January 8, I think it was, or January 7.
And then we upgraded it after the most recent earnings call May 6, because, basically, on that call, like I was mentioning, there was no mention of AI GPU sales, which confirmed our thesis that, hey, listen. Wall Street is expecting AMD to be this next NVIDIA to still share. That’s not gonna happen.
And I think this is a turning point with Wall Street understanding that more and grasping the idea that, hey, maybe AMD’s AI GPU expectations are misplaced. But the reason why we upgraded in the first place because Wall Street expectations may be getting reset now in that regard.
But even if those expectations are still high, now with the hype around NVIDIA, AMD tags along, even if those expectations remain high, what we’re we’re what we’re eyeing for AMD, why we upgraded, is because we think on the CPU side, server and client, we could see more upside from sales that could offset whatever lackluster AI GPU growth there is.
So that’s kind of our thesis now on AMD. We think there could be a lot more upside in the near term based on that, especially with tariff uncertainty.
Although we don’t think tariffs are gonna come back to being over 100% for China in the US, we think there still could be customer panic and a lot of pull in in terms of CPUs, that could benefit AMD’s print in the near term and show the upside.
RS: Are there a lot of concerns which would be super valid – what are you most hearing from subscribers?
SA: Yeah. Of course. So there’s been there’s a lot of concerns. I think a lot of a lot of subscribers, a lot of investors in general now in the market are pretty panicked because it really depends on what’s gonna happen, and no one really knows what’s gonna happen, especially when it comes to tariffs.
But what we’ve had most conversations about is basically where’s the safe haven? Where do I put my money so that it can see the most potential upside, but also more importantly than making money, just make sure I’m not losing any even if I’m making slower returns.
So that’s been basically where the center of conversation has been and what we’ve been advising investors is to seek the fundamentals. So, for example, there’s specific trends that play out especially when it comes to tech.
And memory is one of them. So when everything kind of crashed and hit a low, we were talking about Micron. We were talking about DRAM. Micron hit into the the sixties range, and since then, it’s up back into the nineties now.
And so we we’ve been kind of guiding investors to take advantage of the sell off rather than fear it and kinda jump into the companies that have solid fundamentals that the industry or the broader supply chain need.
So that goes into memory, but that also goes into the semi cap guide. So, like, (ASML), like Lam Research (LRCX), like AIMA. Technology will keep advancing with tariffs or without, and there will always be this need to to get the newest semiconductor capital equipment.
And so these guys are more often than not gonna still see upside in the longer term driven by these trends even if tariffs stay, even if tariffs weigh on. So it was mainly if the idea was kinda making sure everyone is well situated, taking advantage of the settle off rather than biting your nails after everything’s recovered.
RS: Thank you for the conversation, Sara, and thank you for all the updates and the insight. I really appreciate it. I think investors will too. Happy to leave you with the final word if you wanna leave investors with any final note or sentiment or anything about how to get in touch with you.
Again, your articles on Seeking Alpha are written under Tech Stock Pros. The investing group is Tech Contrarians.
SA: Thanks so much for having us. It’s really always a pleasure to talk through things with you here.
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