Three of the “Mag 7” firms will post quarterly results this week. Investors heavily exposed to AI suppliers will watch their customers closely this week.
Microsoft (MSFT), Alphabet (GOOGL), and Amazon (AMZN) will report their capital expenditures incurred in the quarter. Expect them to reaffirm or even raise their costs this quarter. Memory, storage, and GPU chip prices showed no signs of falling. Additionally, Chatbot suppliers need to train their LLMs, which increases demand for compute.
Semiconductor stocks that will swing wildly this week include SanDisk (SNDK), a NAND storage supplier, SK Hynix (SKHY), a memory supplier, and Intel (INTC), a CPU supplier. Ahead of its earnings report, SKHY stock slumped from a high of $199.87 to close at $137.02 on Oct. 23.
INTC stock topped over $120 last month only to close below $87.
The earnings report is a make-or-break event for SNDK stock. Shares failed to rebound to the $2,000 level. The stock is dirt cheap despite the company offering strong growth and profitability. Fearful investors continued to price in the risk of China’s CXMT taking Micron (MU) and SanDisk’s memory chip market share.
Chinese firms have a strong history of flooding the market with oversupply. The EV boom ended partly due to XPeng (XPEV), Nio (NIO), and BYD (BYDDF) selling millions of EVs globally. The solar energy bubble popped over a decade ago for the same reason: market oversupply.
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