When oil prices pulled back slightly and U.S. Treasury bond yields dipped a few points, investors flocked back to the AI trade. Expect that rotation to continue today.
Hewlett Packard Enterprise (HPE) and Super Micro Computer (SMCI) might offer a post-bounce rally. SMCI stock gained 9.5% on Thursday. Dell Technologies (DELL) closed at $588.40, another all-time high. Among those three AI server suppliers, bears hold the biggest short on SMCI stock at a 16.32% short float.
Watch Coherent (COHR) and Lumentum (LITE) today. The optical networking rally needs those two stocks to withstand profit-taking.
Among the stocks dipping sharply for a potential reversal, look at Axon Enterprise (AXON). The stock shaved $200 from its stock price in only a month, closing at $453.50. The firm priced a $1 billion aggregate principal amount of 0% convertible senior notes. They mature in 2031. This issuance has a conversion price of $652.06, which is far from its last price.
In the AI infrastructure space, look at Sterling Infrastructure (STRL). The stock entered a bear phase in June, after shares peaked at over $1005. It closed at $505.72, trading at a forward P/E of below 20 times.
Related firms include Celestica (CLS), whose stock is also in a downtrend. Dycom Industries (DY) peaked at $566.47 earlier this summer. It closed at $285.49. In the last quarter, the firm reported contract delays, which scared its shareholders.
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