11/17 Mitigating AI Bubble Controversy and Turning Down and Upward due to Samsung Electronics’ Power
The U.S. stock market started lower due to the Fed’s weakening interest rate cut stance and controversy over the AI industry’s overvaluation. However, the sentiment of buying back continued, and while the “buy in case of a fall” trend was still ongoing, especially with the AI industry reducing or shifting its fall, other semiconductor companies showed their power to turn upward as Micron (+4.17%) surged due to Samsung Electronics’ sharp increase in semiconductor chip prices. In addition, the recent surge in weekly option trading due to increased volatility in the index has also led to a concentration of supply and demand factors affecting AI-related industries (-0.65 percent, Nasdaq +0.13 percent, S&P 500 -0.05 percent, Russell 2000 +0.22 percent, Philadelphia Semiconductor Index -0.11 percent)
Recently Michael Burry warned that the current AI craze is overrated and in a bubble. Notably, it noted that the current AI stock valuation is over-inflated compared to its future earnings potential, extending the age of depreciation and reducing the amount to be immediately reflected. However, JPMorgan claims that AI investment is a sustainable growth engine, not a bubble, and presents the economic feasibility of this investment in figures. JPMorgan analyzes that in order to achieve a 10% return over the next five years, the global AI ecosystem needs to generate about $650 billion in annual revenue. While the $650 billion annual figure may seem high, it is claimed that this can be achieved through AI-based productivity improvements.
It emphasizes that the massive capital expenditure is based on the demand for hyperscalers and companies to adopt AI models, which, unlike the speculative bubbles of the past, is creating a virtuous cycle structure supported by practical adoption. In addition, it announced that the current stock price is a legitimate expansion that reflects this future profit potential. In particular, since companies are already gaining significant value through AI in the form of cost reduction and productivity increase, we conclude that investing in AI infrastructure is not a speculative expenditure, but an essential investment to increase efficiency. As a result, the recent AI bubble theory has been partially eased, and buying has flowed in mainly from related companies, which has a positive impact on the index.
Amid this situation, some media recently reported that Samsung Electronics has raised the supply price of some DDR5 products by 60% against the backdrop of a surge in memory demand and a shortage of supply due to the construction of large-scale AI data centers. This is interpreted as a strong signal that AI-related chip shortages continue and demand is expanding more than expected. Micron (+4.17 percent) rose sharply and led memory and AI-related companies to share prices. In the end, the psychological factors of easing controversy over AI bubble and the increase in memory prices combined, leading to a shift in the index due to the inflow of back buying into AI-related stocks that have recently weakened
Semiconductors: Micron Surges Expectations On Reports Of Samsung Electronics’ Price Hike In Semiconductor
Nvidia (+1.77%) started lower on news that Microsoft and Amazon supported strong export restrictions to China, but rose as Micron and other semiconductor companies turned strong. In addition, the positive outlook report on the AI industry by JPMorgan and the influx of buying in the run-up to the earnings announcement were also positive. Micron (+4.17 percent) and SanDisk (+4.35%) rose after the news that Samsung Electronics raised the price of its 32GB DDR5 chip module by 60 percent. Continued demand due to price hikes and such factors could have a big impact on earnings. As a result, most semiconductor companies, including Broadcom (+0.73 percent) and TSMC (+0.93 percent), are strong. AMD (-0.46 percent) is sluggish. Philadelphia’s semiconductor index fell 0.11 percent
Server, AI: Mixed by category
Super microcomputer (+3.79 percent), Arista Network (+0.82%), and Dell (-0.13 percent) also succeeded in reducing or shifting upward. However, cloud-related companies such as Coreweave (-1.25%), Nevis (-5.74 percent), UI Pass (-0.43 percent), C3AI (-0.21 percent), Big Bear AI (-4.42%) and Paladine AI (-4.35%) continued to decline or showed limited fluctuations. This is estimated to be due to the concentration of supply and demand in some large-cap stocks
Cars: Tesla Turns Higher With Bullish Buying Inflow
Tesla (+0.59%) succeeded in turning upward due to the influx of backlash from recent declines. In particular, some media outlets said that despite the sharp drop on the previous day, active buying by individual investors was flowing in, and today it turned upward due to the power of supply and demand. However, as there is still anxiety about the electric vehicle industry, related companies such as Rivian (-7.81%) and Lucid (-6.39%) continued to decline. Secondary battery companies such as QuantumScape (-1.03%) are sluggish. Lithium-related stocks are mixed, with Albumal (-0.50%) rising while Lithium America (-3.04%) falling. Most automobile-related companies are falling, with GM (-1.91%) and Ford (-0.68%) showing sluggish performance
Big Tech Stocks: Alphabet Rises After Hours On News Of Berkshire Hathaway’s Buy Through 13F
MS (+1.37%) rose on the news that Baird is leading the AI revolution, outperform with investment opinion, and start coverage at $600. Apple (-0.20%) rose after news of a 22% year-on-year increase in iPhone sales after the release of the iPhone 17 model, but eventually turned downward as it went on sale. Alphabet (-0.77%) declined after a fall start on news that it had presented changes to meet EU regulations. After the market closed, Berkshire Hathaway’s purchase increased after hours. Meta Platforms (-0.07%) have been weak due to excessive capital expenditure issues, so the return flows in and remains strong. Amazon (-1.22%) is sluggish, reflecting anxiety about the end-of-year shopping season.
Software: Palantir Turns Higher With Bullish Buying Inflow
Palantir (+1.09%) General dog whose CEO made aggressive accusations against his critics and bought shares
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