“Where you want to be is always in control, never wishing, always trading, and always, first and foremost protecting your butt.” – Paul Tudor Jones Things can change quickly in the stock market.The beginning of the year is a good time to evaluate price movement and underlying market direction. It’s a time where traders should be focused not on offense, but on defense and playing things slowly. It’s the first inning of a twelve inning stretch. There’s no need to rush; rather, let the decisions come easy and ...

Market Overview - The S&P 500 has achieved a total return exceeding 17% year-to-date in 2025, marking the continuation of a bullish trend into its fourth year [1] - The year has been characterized by volatility, with the S&P 500 nearly entering a bear market early in 2025 due to tariff-related issues [2] - A subsequent V-shaped rally occurred as inflation trends improved and corporate earnings exceeded expectations, driving the S&P 500 to record highs [3] Sector Performance - The information technology and communication services sectors led the market in 2025, driven by the artificial intelligence theme [7] - However, the AI-driven rally has recently stalled, particularly in December, indicating potential challenges ahead [7] Santa Claus Rally Insights - The Santa Claus Rally period, which typically shows strong performance, has seen negative returns thus far, raising concerns for 2026 based on historical trends [8] - Negative returns during this period have historically preceded bear markets or opportunities to buy stocks at lower prices later in the year [8] Top Performing Companies - **Sandisk (SNDK)**: Achieved over 560% growth since its February 2025 debut, with projected fiscal 2026 EPS growth of over 300% to $12.59 per share, driven by strong NAND pricing and AI-related demand [12][13] - **Western Digital (WDC)**: Delivered over 290% return year-to-date, with fiscal 2026 adjusted EPS projected at $7.66, reflecting a 55% increase from the previous year [15][16] - **Micron (MU)**: Reported a nearly 49% year-over-year revenue increase to around $37 billion in fiscal 2025, with a stock surge of nearly 250% driven by high demand for high-bandwidth memory [22][24] Industry Trends - The computer storage devices industry, including Sandisk and Western Digital, ranks in the top 8% of Zacks Ranked Industries, benefiting from the explosive growth in AI-powered storage markets projected to reach $187.61 billion by 2035 [19] - Data center operators are expanding infrastructure rapidly, sustaining demand for both HDDs and NAND flash-based solutions [19]

Core Viewpoint - The Zacks Computer – Storage Devices industry has significantly outperformed the broader market, driven by explosive growth in artificial intelligence workloads requiring high-capacity storage solutions [2][5]. Industry Performance - The Zacks Computer – Storage Devices industry advanced nearly 70% year-to-date, compared to the S&P 500's 16.5% gain [2]. - Data center operators and hyperscalers are expanding infrastructure rapidly, sustaining demand for both hard disk drives (HDDs) and NAND flash-based solutions [3]. Company Highlights - Western Digital Corporation (WDC) has delivered a remarkable 260% return year-to-date, with fiscal 2026 adjusted EPS projected at $7.66, reflecting over 55% growth from the prior year [7][9]. - Revenues from the Cloud segment, which account for nearly 90% of Western Digital's revenue, grew 31% in the most recent quarter [9]. - Sandisk Corporation (SNDK), spun off from Western Digital, has risen nearly 500% since its relisting in February 2025, with fiscal 2026 EPS growth projected at over 300% [10][13]. Market Trends - The AI-powered storage market is projected to grow from $30.27 billion in 2025 to $187.61 billion by 2035, at a 20% compounded annual growth rate (CAGR) [6]. - Innovations such as UltraSMR and heat-assisted magnetic recording have enabled Western Digital to ship industry-leading 30TB+ drives tailored for AI data lakes [9]. Investment Outlook - Both Western Digital and Sandisk carry Zacks Rank 1 (Strong Buy) ratings, benefiting from favorable earnings revisions and positioned to capture a significant share of the upcoming storage spending wave [18].

Core Viewpoint - Super Micro Computer, Inc. (SMCI) is expected to report strong revenue growth for Q3 fiscal 2025, driven by rising demand for AI workloads and its leadership in liquid cooling technology [1][7][16]. Financial Performance - The company anticipates revenues between $5 billion and $6 billion, with a Zacks Consensus Estimate of $5.34 billion, reflecting a 38.6% increase from the previous year [1]. - Non-GAAP earnings per share are projected to be between 46 cents and 62 cents, with a consensus estimate of 52 cents, indicating a decline of 22.4% year-over-year [2]. Market Position and Demand Drivers - SMCI's stronghold in the Direct Liquid Cooling market, holding approximately 70% market share, is expected to stabilize its revenue [9]. - The demand for high-performance and energy-efficient servers is anticipated to rise due to the expansion of data centers and the increasing adoption of AI technologies [7][10]. - Partnerships with NVIDIA and the integration of advanced GPUs are likely to enhance the company's financial performance in the upcoming quarter [8][17]. Stock Valuation - SMCI shares have decreased by 59.1% over the past year, underperforming the industry average decline of 40.5% [11]. - The company is currently trading at a forward P/E ratio of 11.60X, which is lower than the industry average of 16.46X, indicating a potential investment opportunity [14]. Growth Prospects - The integration of Intel and AMD processors in SMCI's products is expected to drive demand in AI, high-performance computing, and data-intensive workloads [18][19]. - The company's focus on scalable AI training and inference infrastructure positions it well for sustained long-term growth [16][20].