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Some of the air is coming out of the AI trade. Super Micro Computer hasn't been super recently. It fell 12% today after auditor Ernst & Young resigned due to inaccurate financial reporting, and is now down 66% over the past six months (chart). Super Micro Computer is a key vendor for building out Nvidia-based clusters of servers used for training and deploying AI models
Meta and Microsoft fell 4.1% and 6.0% today, respectively. Yesterday's earnings calls show that Meta's AI-related capex continues to grow while the ROI isn't obvious. Microsoft is struggling to add more cloud computing capacity to meet surging AI demand. This is a case of companies not keeping up with lofty growth expectations and valuations rather than a slowdown in AI spending, cloud computing, or the broader economy. On the macro front, things look super, in our opinion.
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