First sign of overpredictions for AI and semiconductors?

And fresh disappointment for the sector with Intel’s estimates for the first quarter coming in significantly below expectations: The group expects EPS of $0.13 while analysts had more than doubled the $0.33 figure expected. Analysts expected $14.15 billion against similar disappointment on revenue expectations with Intel announcing a range of $12.2 billion to $13.2 billion…

“Data center and AI” (DCAI) activity is 10% lower in the fourth quarter of 2023 than in 2022.

While the semiconductor sector index (SOX index) has a high valuation multiple (the price/earnings ratio for SOX is 35 compared to an average of 25 for the SP500, knowing that a ratio of 25 is already high for the SP500 compared to its 10-year average, etc.), the risk of asymmetric reaction in markets is high. This means that good results may not be greeted with sharp increases while results that fall short of expectations (or estimates) will be sharply revised.

The question that arises at this stage is not the medium-term potential, which should always be present in this key technical area, but the valuation levels in relation to market expectations which are perhaps too optimistic at the moment. short term

Not forgetting the impact of rates: Rates have rebounded for a month under the impact of multiple announcements from central bankers that were intended to push back market expectations on the date of the first rate cut (the market was convinced it would happen in March. While central bankers, on both the Fed and ECB sides, Leaning towards the end of the second quarter…).

This recovery in rates, along with a rather erratic reporting season for the semiconductor sector, could force the Sector Index (SOX) to consolidate. Which may also affect Nasdaq…