Nvidia plummeted by $200 billion
Source | U.S. stock investment network
Nvidia single-handedly led the market crash today, and its stock price fell as much as 10% in a single day. The market value evaporated by nearly $200 billion in one day, creating the second largest single-day market value decline in the history of U.S. stocks!
The Nasdaq fell more than 2% in a single day for the first time since Fed Chairman Jerome Powell shattered market expectations for a rate cut in March at the end of January. The S&P posted its worst weekly performance since the risk shock of the collapse of Silicon Valley Bank in March last year.
The trigger for this market turmoil was the 23% plunge of ultra-micro computer (SMCI), known as the "10 baggers of a year"!
The decline was largely due to the company's announcement in a press release on Friday that it would report its financial results for the third quarter on April 30, but failed to provide preliminary results as previously customary. This abrupt change caused great unease in the market, causing investors to dump their shares in droves.
For the first quarter of 2024, Supermicro had expected sales in the range of $3.7 billion to $4.1 billion and non-GAAP earnings per share of $5.20 to $6.01. And for the full fiscal year 2024, the company expects its revenue to reach $14.3 billion to $14.7 billion.
However, according to data tracked by market analytics platform FactSet, the consensus for the quarter is $4.0 billion in sales and $5.84 per share, and full-year sales are expected to be $14.6 billion and adjusted earnings per share of $21.95.
In January, when Supermicro raised its sales and earnings guidance for the second quarter 11 days ahead of schedule, its stock price rose strongly as a result, which also led to a significant rally in artificial intelligence concept stocks. As a result, the company's lack of a positive advance statement, especially in the key area of artificial intelligence, was interpreted by the market as a negative signal.
The core of Supermicro's business is the production and sale of computers for web servers, data storage, and AI training to enterprises. The company's partnerships with several heavyweights, including NVIDIA, NASA and NEC, demonstrate the importance of its products in the market. The key to Supermicro's success is to provide the necessary infrastructure for AI chips, even chips from different vendors need Supermicro solutions for access and cooling, which allows the company to benefit from the growth of the entire AI industry.
As a result, when Supermicro's share price plummeted, the impact quickly rippled through the entire industry, especially its main partner, Nvidia.
As a major producer of AI chips, Nvidia relies on Supermicro's server infrastructure. The market turmoil caused by the decline in Supermicro's share price has directly affected the valuation of Nvidia and related companies' share prices, reaffirming the close relationship between the two companies.
Video in-depth analysis
In fact, this is not the first time that Supermicro has brought down AI concept stocks such as Nvidia. In August last year, Supermicro plummeted by more than 23% in a single day, which also dragged Nvidia down nearly 5% on the same day.
It should be noted that Supermicro did not respond to media inquiries on Friday.
According to the analysis of the U.S. stock investment network, despite the current market adjustment, given the long-term growth prospects in the AI field, large funds may not easily withdraw from this field. Next, the focus will be on the performance of key technology companies such as Nvidia and their annual capital expenditures. In addition, further rally in the market may also require new capital injections and the emergence of a "grand narrative".
There is no doubt that Nvidia has fallen so much, and its valuation has fallen again. Looking at current valuation trends, Nvidia's price-to-earnings (PE) ratio has dropped significantly from a high of 243.49 in July 2023 to 63.87 on April 19, 2024.
This huge repricing reflects a major correction in the market and a shift in investor sentiment. A sharp decline in the P/E ratio suggests that growth expectations have become more modest, or that the stock price has readjusted to a level that is considered more in line with the company's earnings potential.
In-depth interpretation of NVIDIA's disk
At the end of today, according to the big data StockWe.com of U.S. stocks, in the Darkpool channel of institutional dark pools, we detected that institutional traders sold orders worth $400 million. The number of shares is 545,000 shares.
At the same minute, he re-sold a $117 million CALL with 5,450 contracts.
Through analysis, we are very sure that this is the same trader's doing, because these 5,450 shares correspond to 545,000 shares of 5,450 contracts, and one contract represents 100 shares, 5,450x100=545,000 shares
Why do traders wait until Nvidia is down 10% before they want to sell it, instead of selling it after it's down 5%?
There should be many reasons behind this behavior, but if we speculate, one of them is more plausible, and that is because the cost of entering Nvidia is relatively low, and he does not want to sell Nvidia, which falls to 5% At that time, he didn't want to sell, because as soon as he sold, he would immediately pay hundreds of millions of profit taxes to the IRS, which was not a small amount, but he saw Nvidia fall all the way down, either he was under pressure from the boss, or he was forced to close the position before the market closed. (This trader is bearish)
Another institutional trader adopts a different strategy, buying the next month's CALL, buying and selling the same trading day, the same strike price, the same number of contracts, (this trader is bullish)