Commentary

Last week marked the peak week for fourth-quarter earnings announcements, and the news on some of our stocks was stunning. For example, Super Micro Computer (SMCI) announced that its quarterly sales rose 203.3% to $3.665 billion, compared with $1.803 billion in the same quarter a year ago. During the same period, the company’s earnings rose 62.4% to $296 million, or $5.10 per share. Furthermore, SMCI raised its guidance above analyst estimates, even though it had just raised its guidance two weeks earlier.

Also, Nvidia (NVDA) forecasted 207.3% annual sales growth and 371.6% operating earnings growth, so both Nvidia and Super Micro Computer are leading the AI revolution with their massive earnings growth.

The downside is that some technology stocks are “priced for perfection,” so stocks like Advanced Micro Devices (AMD) and Google (GOOG) were under selling pressure after AMD provided weak guidance and GOOG’s ad revenue disappointed analysts. The good news is that 10-year Treasury bond yields fell to 4.02%, and lower inflation expectations or any Fed rate cuts should help Treasury yields continue to fall.