to understand what is happening with the stock market, you need to know the big picture, like what is going on with companies that make money from using artificial intelligence. One company, super micro computer, had its stock price drop a lot because of problems it was having. People who invested a lot of money in this company when the stock price was high are now losing a lot of money. This is a good example of why you need to be careful when investing in things like artificial intelligence, because sometimes things don't go as planned. Read from source...

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Investing In AI
Please click here for an enlarged chart of Super Micro Computer Inc SMCI.
Note the following:
This article is about the big picture, not an individual stock. The chart of SMCI is being used to illustrate the point.
SMCI has long been the second most favorite stock of the momo crowd. A majority of the momo crowd positions were bought when the momo crowd was super excited on SMCI crossing above $1000. As of this writing in the premarket, SMCI is trading at $432.24.
The chart shows the SMCI stock took another leg down when SMCI said that it would not timely file its Annual Report on Form 10- K for the fiscal year ending June 30, 2024. The delay is apparently due to weakness in internal controls.
The chart shows that the drop was on heavy volume. This indicates that sellers had conviction.
RSI on the chart shows that the stock is oversold and can bounce.
The chart shows that from the peak SMCI stock has fallen 67.6%. There is anecdotal evidence that many momo crowd investors were going all in on SMCI above $1000. Such investors are now sitting on massive losses.
The chart shows SMCI demonstrates the perfect example of what not to do when investing in AI.
The chart should not surprise you because as a reader of The Arora Report, you knew a drop was coming. The high in SMCI occurred on March 8. Four days before the high, on March 4, we wrote in the Morning Capsule,
SMCI has become a favorite of the momo crowd. The momo crowd incorrectly thinks SMCI has the same potential as NVIDIA Corp NVDA. Investors need to keep in mind the following:
SMCI moves a lot more than NVDA. SMCI is so volatile because of the small float.
SMCI is an assembler of servers for artificial intelligence. It uses components from NVDA, Micron Technology Inc MU, and Marvell Technology Inc MRVL.
NVDA has a large moat to protect it that includes IP for its GPUs. SMCI has no moat and the barrier to entry for competitors is low.
SMCI sales are to hyperscalers like Microsoft Corp MSFT, Amazon. com, Inc. AMZN, Alphabet Inc Class C GOOG. The reason SMCI sales are booming is that they have availability of NVDA chips. As chips become more available to competitors, SMCI will not be able to sustain its sales growth rate.
The momo crowd is buying SMCI due to lack of knowledge. However, there are many investors who understand and have the knowledge of SMCI's business. Many such investors are short selling SMCI. For the time being, short sellers are being overwhelmed by the YOLO crowd.
Taking all

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