The technology sector suffered another rough day. The Nasdaq (QQQ) lost close to 3% on Thursday, while the small cap index (IWM) held steady.
Small cap stocks benefit from bond yields on the decline. Conversely, the panic for AI firms on shaky balance sheets worsened. CoreWeave, which holds over $50 billion in debt, led the decline. Nvidia (NVDA) said earlier this week that it did not need to back CoreWeave. That did little to stop the selling pressure. NVDA stock lost 4.4% to close at $212.21.
CRWV stock is down by 20% in the last week.
TTM Technologies (TTMI) took another major leg down on the charts. Shares dropped by 27.67% after the firm posted quarterly results. In June, TTMI stock plunged from around $220 to $160. It closed at $73.89.
TTM posted a 59.4% Y/Y increase in revenue, to $1.2 billion. The book-to-bill ratio was 2.13. For 2027, its net sales outlook of up to $6.75 billion exceeded consensus estimates. So did its non-GAAP EPS of $8.10 - $8.90.
Markets did not respond well to the sharp increase in debt. Despite the firm having plenty of non-cash to cover its debt obligations, the debt coverage relies on EBITDA growth.
TTMI stock has relatively more risk than the industry if the AI sector slows down. Markets are only speculating that it will happen. Demand far exceeds the limited supply for AI servers.
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