The NATO summit saw a dramatic shift from confrontation to alliance, while semiconductor stocks recovered after initial disappointment. Ukraine's drone attacks on Russian energy infrastructure are impacting the war and NATO's investment strategy.
Investors sold off semiconductor stocks Tuesday after Samsung Electronics' earnings, despite surpassing Nvidia and Apple, failed to meet high AI demand expectations. This led to significant drops in Samsung, SK Hynix, and US memory makers, with concerns growing over AI spending and memory prices.
Michael Burry has initiated a short position against Micron Technology, citing 'historically extreme' stock levels driven by AI hype and FOMO, not fundamentals. He points to the company's cyclical history and poor profitability metrics as indicators of significant downside risk.
Semiconductor companies Cerebras and Micron are set to report earnings this week, providing crucial insights into the sector's performance. Cerebras, a recent IPO, faces investor scrutiny after a significant stock drop, while Micron's report is a key test for memory chip stocks, which have seen explosive growth driven by options market activity.
China's Supreme People's Court upheld a ban on Infineon Technologies selling GaN products, following a patent dispute with domestic rival Innoscience. The ruling caused Chinese semiconductor stocks to surge.
Cathie Wood, CEO of ARK Invest, advised investors to continue buying semiconductor stocks in installments, emphasizing a strong conviction in the AI trend lasting for years. She also noted potential investments in Samsung Electronics and Hyundai Motor, and expressed a view that the US Federal Reserve will not raise interest rates this year.
Personal leverage investment in South Korea has reached a record high, primarily driven by the semiconductor sector. The Bank of Korea expressed concern about the 'FOMO' (fear of missing out) sentiment fueling this trend, though it assessed the risk of systemic crisis as low.
Put open interest in the VanEck Semiconductor ETF has surged to a record level, suggesting traders are hedging the semiconductor rally rather than aggressively betting against it. Implied volatility is also elevated, especially versus the broader market.
Semiconductor stocks are on track for their biggest down day since March 30, with the VanEck Semiconductor ETF (SMH) down about 1% after an early Qualcomm rally reversed. Despite the broad decline, options activity remains bullish in Nvidia, where a $2.2 million purchase of 2,168 at-the-money $210-strike calls expiring May 15 was executed as shares touched a new all-time high of $212.65. Call volume outpaces puts more than two-to-one in Nvidia. Intel bulls are also resilient after a 100% run off last month's lows, with one trader creating a lopsided call spread selling 3,000 $60-strike calls to fund purchase of 10,000 $95-strike calls expiring June 18.
