The artificial intelligence sector has winners and losers. Topping the loser’s list is Super Micro Computer (SMCI). The stock risks re-testing Monday’s sub-$22 low today.
SMCI should have a ‘Sell’ rating. The firm did not offer more clarification about its SEC filing. Without an annual report filing, the exchange may delist SMCI. Furthermore, Ernst & Young abruptly resigned, which signals a lack of confidence in SMCI’s revenue, bookings, and profits.
Bottom fishers successfully formed a support level for Intel (INTC) stock at $19.40 to $23.00. Still, sellers may close their position at over $25.00. At these levels, INTC stock is still overvalued. The firm does not have positive earnings, so it does not have a meaningful price-to-earnings ratio. By comparison, the sector median P/E is 32 times.
Nvidia (NVDA) has a good chance of continuing its uptrend. It replaced Intel on the Dow Jones earlier this month. Bulls could build enough momentum to send this stock to $175 to $200.
Microchip (MCHP) touched a 52-week low at $69.00 on Monday. The stock is overvalued at a P/E of 50.7 times. This sets up a valuation correction for MCHP stock. If markets panic about the AI stock premium, Broadcom (AVGO), KLA Corp. (KLAC), Lam Research (LRCX), and Seagate (STX) could fall, too.
