The chip crash: first crack in the AI euphoria?

Last Friday, the semiconductor sector literally plunged by 10% in a single trading session. We haven't seen anything like this since 2020. Basically, it was a real slam on the brakes for the market. So, I asked myself if this was just a brief soft patch or the end of the artificial intelligence euphoria. In this article, I dissect the current stock market situation. We will look at the recent rebound, Apple's new strategy, not to mention the upcoming US inflation data. Anyway, stick around with me. By the way, I'll also tell you the story of Cisco's nearly 80% collapse in the wake of the 2000s.

Subscribe to the YouTube channel with 1 click

The context: a market seized by vertigo

The recent crash in semiconductors made everyone tremble. In fact, panic kind of set in. However, this morning, Asia is showing a completely different dynamic. South Korea literally saw its index surge. Samsung and Hynix jumped by nearly 6%.

By the way, while the CAC 40 stagnates around 8,000 points and Bitcoin slips under $60,000, the Nasdaq is breathing again. It has regained altitude by leaning on the 29,000-point mark.

However, the zone remains very tense. Investors are holding their breath ahead of key deadlines. Three major stakes stand out to see things more clearly.

The three current market drivers

1. The strength of the tech rebound.
   The Nasdaq is climbing back up, that's an undeniable fact. But it absolutely must confirm this trend. We are watching the monthly pivot point, a key support, around 29,500 points. If it holds during the session, it's a good buy signal for what's next. Otherwise, exercise extreme caution because volatility is totally crazy right now.

2. Apple's artificial intelligence strategy.
   Tim Cook unveiled his vision with a revamped Siri. Honestly, what was the brand's real smart move? Relying partly on Google's external Gemini model rather than creating everything from scratch. Apple avoids spending billions on research, thereby limiting its financial risks. The market logically pushed back, dropping by nearly 2%, but it's a huge classic. Buy the rumor, sell the news.

3. Tomorrow's US inflation.
   This is the big piece highly anticipated by all investors. If inflation drops, the Fed might review its rates and kick-start the economy again. On the other hand, if it remains high, the market is seriously going to shake once more. Everyone is waiting for this figure to adjust their positions.

The lesson from the past with the dot-com bubble

Do you remember the year 2000? Cisco was selling the picks and shovels for the great Internet rush. It's quite similar to our famous chipmaker today—I am, of course, talking about Nvidia. Back then, Cisco was worth nearly $500 billion; in short, pure madness.

Yet, in just 18 months, its stock plummeted heavily and lost nearly 80%. The Internet obviously didn't fail, we are all using it. In fact, the stock just went up way too fast. A very real revolution can absolutely be accompanied by completely irrational stock market valuations.

Keeping some nuance

So let's keep a cool head. Artificial intelligence is a powerful, structural evolution, no doubt about it. However, a company can generate tremendous innovations while still being overvalued. The current rebound requires rigorous observation. Let's remain wary of this incredible asymmetry between our expectations and the reality of the cycle.

Conclusion

In short, the market is digesting its little setback with technical rebounds in Asia. Between Apple's calculated method and the intense pressure of inflation, the suspense continues. Strictly respect your management framework and rely on discipline rather than spectacular rumors.

Sign up for the newsletter and receive a $100 USD gift token