AI Hardware Stocks Get Pummeled Even as Big Tech Keeps Spending

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Arm Holdings Plc,Super Micro Computer,Super Micro

(Bloomberg) -- The good news for makers of semiconductors and other artificial intelligence computing hardware: tech giants plan to keep spending heavily...

-- The good news for makers of semiconductors and other artificial intelligence computing hardware: tech giants plan to keep spending heavily. The bad news is that investors are harder to impress this earnings season.Shares of Advanced Micro Devices Inc. and Super Micro Computer Inc. have sold off despite projections of rising sales from buyers of equipment used in data centers.AMD fell as much as 8.1% on Wednesday after a raised revenue forecast for accelerator chips didn’t win over investors.

“Valuations in this space are clearly being driven by multiple years of earnings growth and that always embodies a higher degree of uncertainty,” said Joanne Feeney, partner and portfolio manager at Advisors Capital Management.For AMD, some analysts question how well the firm is placed to deal with “the threat of own chip production coming from companies such as Microsoft, Meta, and Google,” said Garnry.

Bulls will point to positive signs of demand. On Tuesday, Amazon.com Inc.’s cloud computing unit posted its strongest sales growth in a year, aided by demand for artificial intelligence services. Chief Financial Officer Brian Olsavsky said Amazon’s capital expenditures would increase “meaningfully” this year, compared with 2023, primarily to support growth at Amazon Web Services.

“Equity investors may be better off looking at the big wood of Treasury yields rather than the trees of quarterly results if they are to discover why the US market equity has just thrown out its worst month since September,” he said. “Even if the quarterly results season has been benign and generally lived up to high expectations.”Tesla Inc.’s pivotal partnership with Baidu Inc.

The internationally recognized government of Yemen is nearing a licensing deal with Elon Musk’s Starlink to provide satellite internet service to the war-torn country, according to a senior government official.Modi Is $20 Trillion Short on His Grand Plan for India’s EconomyStock market indexes cap off the last day of trading in April, closing lower this session and over the past month. The Dow Jones Industrial Average fell off by 570 points in Tuesday's session.

 

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