Group 1 - The article discusses the potential for undervalued stocks that are mispriced by the market as a focus for investment strategies starting in November [1] - Stone Fox Capital, based in Oklahoma, is led by Mark Holder, a CPA with extensive experience in investing and portfolio management [2] - The investing group "Out Fox The Street" provides stock picks, deep research, model portfolios, daily updates, and real-time alerts to help investors identify potential multibaggers while managing risk [2]

Core Insights - AI investors experienced significant stock declines, with CoreWeave, Super Micro Computer, and SoftBank dropping over 20% in a week, and losing 44%, 40%, and 22% respectively from their yearly highs [1] - Oracle's stock fell 9% during the week and is down 31% since its all-time high in September, losing gains from its optimistic FY30 revenue projections [3] - Major tech stocks, including Nvidia, Tesla, Microsoft, and Meta Platforms, also saw declines between 4% and 9% [3] Valuation Concerns - Palantir Technologies reported Q3 earnings that exceeded estimates, yet its stock fell 8% due to concerns over its high valuation, trading at a trailing PE of 424x and 177x based on estimated CY26 earnings [4] - Michael Burry's fund disclosed short positions in Palantir and Nvidia, raising further concerns about valuations [5] Market Dynamics - OpenAI's CFO indicated the need for a federal "backstop" to finance high-end AI chip investments, which was interpreted as a sign of insecurity regarding funding [6] - The Mag 7 stocks now account for about 30% of S&P 500 earnings, up from 17.5% in 2021, with their earnings compounding at 20% compared to the index's 6% [7] - Earnings of the Mag 7 have doubled from 2021 to 2025, while the rest of the S&P 500 has seen flat earnings, highlighting the reliance on these stocks for index growth [8] Historical Context - The current earnings growth of the Mag 7 is reminiscent of the high growth seen in financial stocks before the global financial crisis, which poses a risk given the current market reliance on these stocks [9] Economic Indicators - Recent data showed US Consumer Sentiment is below the lows of 2008, and job cuts in October reached over 150,000, the highest in 22 years, indicating potential economic weakness [10]

Market Overview - The Nasdaq Composite index closed at 23,004.54 on November 7, down 0.21% for the day and marking a weekly loss of approximately 2.8%, contrasting with a surge of over 50% since April driven by optimism in AI developments and related stocks [1][8] - Major AI-related firms led the downturn, with Nvidia dropping 7%, AMD declining 8.8%, and Meta Platforms and Microsoft each falling around 4% over the week [8] Company-Specific Performance - Super Micro Computer experienced the steepest decline, plunging 23%, indicating concerns about future demand for AI infrastructure [3][8] - The sell-off in AI stocks is attributed to profit-taking after significant gains and skepticism regarding inflated valuations in the sector [3][8] Economic Indicators - A surge in job cuts, the highest in over 20 years for October, has contributed to market anxiety amid a challenging job market environment for 2025 [7][8] - China's exports fell 1.1% year-on-year in October 2025, marking the steepest decline since February and the first contraction in eight months [8] Market Sentiment - Investors are recalibrating valuations due to geopolitical risks and valuation concerns, leading to heightened market volatility and cautious sentiment [6][7] - Despite the weekly decline, the broader US stock market showed resilience, with the Dow Jones Industrial Average rising 0.16% and the S&P 500 edging up 0.13% on November 7, although both indexes logged weekly losses [7][8] Global Market Trends - Global markets exhibited renewed caution, with the MSCI global equities index dipping 0.07% and Europe's STOXX 600 falling 0.55% [7][8] - The dollar index slipped 0.11% to 99.57, while the euro strengthened to $1.1563 [8]

Group 1 - The article discusses the author's extensive experience as a Merchant Seaman and a growing interest in investing over the past 15 years, particularly in Tech stocks due to an engineering background [1] - The author attributes much of their investment knowledge to The MF, indicating a reliance on external resources for learning [1] Group 2 - There is a disclosure stating that the author has no current stock or derivative positions in any mentioned companies and has no plans to initiate any such positions in the near future [2] - The article emphasizes that past performance is not indicative of future results, highlighting the uncertainty inherent in investment decisions [2]

Market Overview - Stocks experienced a significant decline, particularly in the tech sector, with the Nasdaq dropping 3% for the week, marking its worst performance since April [1][10] - Concerns over consumer sentiment and AI spending contributed to the market downturn, with a notable sell-off in tech stocks [1][8] Consumer Sentiment - Consumer sentiment fell to its lowest level in over three years, with a reading of 50.3, reflecting a 6.2% monthly drop and approximately 30% decline from the previous year [2][4] - The ongoing government shutdown, now in its 38th day, has exacerbated consumer concerns about personal finances and economic stability [2][3] AI Investment Concerns - Investors are increasingly worried about the sustainability of massive investments in AI, drawing parallels to the dot-com bubble of the late 1990s [8][13] - Notable declines in AI-related stocks included Super Micro Computer, which fell about 25% this week, and significant drops in shares of Microsoft, Nvidia, AMD, Palantir, Oracle, and Meta, collectively losing about $1 trillion in market value [8][10] Company-Specific Developments - Palantir's stock dropped more than 13% this week despite beating earnings expectations, as analysts questioned its valuation, leading to a short position revealed by investor Michael Burry [12] - Nvidia's CEO Jensen Huang's comments about China potentially "winning the AI race" fueled investor panic, although he later attempted to clarify his statement [13][14] Stock Performance - The tech sell-off was widespread, with AMD, Nvidia, and Oracle each experiencing declines of about 10%, while Meta's shares dipped approximately 6% and Microsoft fell roughly 5% [10][12] - In contrast, some tech stocks like Alphabet and Apple saw smaller declines, with Alphabet down less than 1% and Apple ending the week roughly flat [16][17]

Core Insights - The third quarter earnings season has shown a positive trend, with 91% of S&P 500 companies reporting results and an expected 13.1% increase in earnings per share, marking the fourth consecutive quarter of double-digit growth [2][7] Earnings Reports Overview - Major tech and AI companies such as Palantir, AMD, and Supermicro have reported their earnings, contributing to the overall positive sentiment in the market [1][4] - Constellation Energy reported a GAAP earnings per share of $2.97, missing estimates of $3.05, but its revenue of $6.57 billion exceeded expectations [10][11] - Wendy's reported a revenue of $549 million, a 3% decline year-over-year, but earnings per share of $0.24 beat estimates of $0.20 [13][14] - Block's shares fell 15% after reporting earnings that missed expectations, with earnings per share of $0.54 on revenue of $6.11 billion, below estimates [16][20] - Sweetgreen reported a net loss of $0.31 on revenue of $172.3 million, missing expectations, attributed to a slowdown in consumer spending [18][19] Company-Specific Highlights - Airbnb's stock rose 5% as international bookings supported a 9% increase in nights booked, with significant growth in Latin America and Asia Pacific [29][30] - Moderna reported a smaller-than-expected loss of $0.51 per share, with revenue of $1 billion, a 45% decrease from the previous year, driven by declining COVID vaccine sales [38][39] - Under Armour posted a net loss of $0.04 per share on revenue of $1.33 billion, with a forecast of declining revenue for the fiscal year [31][32] - ConocoPhillips raised its full-year production forecast and reported adjusted earnings per share of $1.61, beating estimates [36][37] - E.l.f. Beauty's stock fell over 21% after a disappointing fiscal year outlook, expecting net sales between $1.55 billion and $1.57 billion, below expectations [43][44]

Financial Performance - Net sales for the three months ended September 30, 2025, were $5,017.8 million, a decrease of 15.5% compared to $5,937.3 million in the same period of 2024[177][194] - Gross profit for the three months ended September 30, 2025, was $467.4 million, resulting in a gross margin of 9.3%, down from 13.1% in the prior year[177][179] - Net income decreased to $168.3 million for the three months ended September 30, 2025, compared to $424.3 million in the same period of 2024[172][179] - Total net sales decreased by $919.5 million or 15.5% year-over-year, primarily due to the timing of substantial customer orders and delays in data center readiness[195] - Net sales in the United States fell by $2,406.8 million or 56.7%, while sales in Asia increased by $1,363.7 million or 142.9%[196] - Gross profit declined by $308.2 million or 39.7%, resulting in a gross margin of 9.3%, down from 13.1%[198] Operating Expenses - Operating expenses increased by 7.0% to $285.1 million for the three months ended September 30, 2025, primarily due to higher headcount and increased compensation costs[177][179] - Operating expenses rose by $18.7 million or 7.0%, with a notable decrease in sales and marketing expenses by $21.0 million or 30.5%[201] Research and Development - Research and development expenses rose to $173.3 million for the three months ended September 30, 2025, compared to $132.2 million in 2024[192] - Research and development expenses increased by $41.1 million or 31.1%, mainly due to a rise in employee-related costs[201] - The company closely monitors product introduction cycles of industry leaders to inform its research and development investments[174] Cash Flow and Capital Expenditures - Cash and cash equivalents decreased from $5.2 billion to $4.2 billion as of September 30, 2025, indicating a need for working capital[213] - Net cash used in operating activities for the three months ended September 30, 2025, was $(917.5) million, a decrease of $1,326.4 million compared to $408.9 million in 2024[217] - Net cash used in investing activities was $(32.3) million, a decrease of $12.0 million from $(44.3) million in the same period last year, primarily due to reduced purchases of property, plant, and equipment[219] - Net cash used in financing activities was $(18.7) million, a decrease of $68.6 million compared to net cash provided of $49.9 million in 2024, mainly due to lower net proceeds from lines of credit and term loans[220] - The company anticipates capital expenditures for the remainder of fiscal year 2026 to be between $200.0 million and $220.0 million, focusing on global manufacturing capabilities and new product tooling[223] Debt and Obligations - As of September 30, 2025, the company has a current obligation of $100.6 million and a long-term obligation of $25.2 million related to long-term debt, along with a convertible debt obligation of $4,725.0 million[225] - The company has current obligations related to non-cancelable purchase commitments totaling $11.6 billion[225] - Interest rates for term loans and revolving lines of credit ranged from 1.3% to 5.8% as of September 30, 2025, with an outstanding principal indebtedness of $125.8 million[230] Market and Economic Factors - Macroeconomic factors such as inflation and supply chain constraints have impacted the company's operations and financial results[176] - The company aims to enhance product capabilities and expand service offerings to meet the growing demand in the AI and data center markets[175] - The company plans to strengthen its network of sales partners and distribution channels to expand market share[173] - The company will continue to evaluate new business opportunities and markets, which may necessitate additional facilities and capital expenditures[223] Other Financial Metrics - Other income, net increased by $44.0 million or 611.1%, primarily due to higher interest income and favorable foreign exchange rate fluctuations[206] - The income tax provision decreased by $34.5 million or 46.2%, reflecting a decline in worldwide income before tax[210] - The decrease in cash flows from operating activities was attributed to a decrease in net income and an increase in inventory purchases, partially offset by higher stock-based compensation[218] - The company has limited exposure to foreign exchange rate fluctuations as most sales and purchases are in U.S. dollars, with minimal historical impact from currency re-measurement[231] - The company has been profitable every year since its inception in 1993[172]

Core Insights - Super Micro Computer (SMCI) missed Wall Street's expectations for its first fiscal quarter on November 4, 2025 [1] - The company reported a slight quarter-over-quarter drop in its non-GAAP gross margins [1] - Despite the challenges, SMCI raised its outlook for future performance [1] Financial Performance - The first fiscal quarter results were below analysts' expectations [1] - There was a slight decline in non-GAAP gross margins compared to the previous quarter [1] Future Outlook - SMCI has raised its outlook for future performance, indicating potential for recovery or growth despite current challenges [1]

Group 1 - Super Micro Computer, Inc. (SMCI) reported its Q1 FY26 results, leading to a significant decline in stock price from approximately $50.60 per share to $41.30 per share during intra-trading [2] - The decline in SMCI's stock price indicates a negative market reaction to the earnings report, which may suggest underlying issues or disappointing performance [2] - Tech Stock Pros, a team of former technology sector engineers, provides institutional-level company research to individual investors, focusing on demystifying technology sector investments [2] Group 2 - Tech Contrarians, an investing group, has achieved a realized return of 65.8% on closed positions since inception, offering exclusive insights and portfolio consultations [1] - The group utilizes a live portfolio with quarterly updates and bi-weekly newsletters to keep investors informed about high-focus stocks [1] - The services provided by Tech Contrarians aim to enhance individual investors' understanding and engagement in the technology sector [1]

Core Insights - Super Micro Computer Inc. is experiencing a significant contrast between its growth potential in the AI hardware sector and its current financial challenges, with Q1 FY2026 revenue declining by 15% year-on-year to $5.0 billion, missing the consensus estimate of $6 billion [1][2][14] - The company has raised its full-year revenue guidance to at least $36 billion, up from $33 billion, driven by substantial orders for NVIDIA's GB300 AI platform [1][2] Financial Performance - Q1 FY2026 results showed a decline in earnings per share (EPS) to $0.35, below the expected $0.46, and a gross margin contraction to 9.5%, the lowest in two years [1][14] - Operating cash flow turned negative at –$918 million, with inventories increasing by $1 billion to $5.7 billion, and the cash-conversion cycle extended to 123 days from 96 [2][11] - The company ended the quarter with $4.2 billion in cash and $4.8 billion in debt, resulting in a net-debt position of $575 million [2][14] Growth Strategy - CEO Charles Liang described FY2026 as a pivotal year for "hypergrowth consolidation," with over 75% of Q1 revenue derived from AI compute platforms [3][12] - The company aims to produce 6,000 racks per month, including 3,000 direct-liquid-cooling units, across expanded facilities in multiple regions [5][12] Market Position and Competition - Super Micro's unique value proposition lies in its speed-to-market and system integration capabilities, although it faces increased competition from Dell, HPE, and Celestica [9][10] - The company has shifted its regional exposure, with the U.S. contributing 37% of revenue (down 57% YoY) while Asia's share increased by 143% to 46% [9][10] Valuation and Investor Sentiment - The stock trades at approximately 18.5 times forward P/E and 0.9 times price-to-sales, significantly below peer medians, indicating a market discount for execution risk rather than growth potential [10][13] - Management emphasizes maintaining profitability and leveraging credit lines to manage liquidity, with a focus on restoring double-digit margins as the business scales [11][15]