Cyber creature eating microchip
Goldman Sachs has hinted that hedge funds have had their fill of chips stocks, for now / Image source: Adobe

Investors have been playing a waiting game this week with all eyes on today’s (28 Jun) US personal consumption price index, a key input in the Federal Reserve’s ‘data-driven’ model which will tell it when it’s safe to cut interest rates.

A May figure of 2.6% or lower, against April’s 2.8% print, and the market will be off to the races, although as Fed chair Jay Powell has said many times before we shouldn’t get carried away about one good data point.

There have been highs this week – (AMZN:NASDAQ) hitting a $3 trillion valuation, Rivian (RIVN:NASDAQ) shares jumping 50% on investment from German carmaker Volkswagen (VOW:ETR) – but there have also been lows, in Micron Technology (MU:NASDAQ)  and Walgreens Boots (WBA:NASDAQ), the past week's biggest loser after a 23% plunge. Aussie bonds were down on a worse-than-expected inflation report, and the Japanese yen, which reached its weakest level against the dollar since 1986.

In an interesting twist, a survey from Goldman Sachs shows hedge funds have been ‘aggressively’ selling tech stocks this month, led by chip manufacturers and equipment makers, with June’s net sales the largest on record.

The news follows a sharp downturn in Nvidia (NVDA:NASDAQ) shares earlier this month, shortly after it became the world’s most valuable company.


The Idaho-based firm’s computer memory and storage solutions put it smack bang at the centre of the AI boom, but while Micron’s most advanced memory is needed for graphics processing units like Nvidia’s, quarterly earnings and guidance was just not blow out enough.

AI excitement is such that Micron investors have chased the shares 60% higher in 2024, and they’ve doubled in under a year, recording an all-time high of $153.45 (18 Jun), but inline guidance was not enough to convince the fast money that there’s more upside in the near-term.

What it did say, and show, is that the long-run AI story remains intact, with guidance for 90% year-on-year revenue growth. The most important part of the update is Micron’s ramping HBM (high bandwidth memory) technology this year, a meaningful market share landgrab that could hit 20% in 2025, from zero at the start of this year. Demand is such that Micron has now fully sold out HBM capacity through the end of calendar 2025.

‘We believe that Micron will be one of the biggest beneficiaries in the semiconductor industry in the multiyear growth opportunity driven by AI’, said chief executive Sanjay Mehrotra said.


Investors ‘just did it’ and sold shares in the trainers’ giant overnight, and who can blame them. They have started to get used to underperformance from a sportswear firm that used to tick all the right investment boxes.

While Nike’s (NKE:NYSE) fourth quarter earnings beat Wall Street expectations, thanks to cost-cutting, revenue of $12.61 billion came in 2% light of consensus. But the real damage was done by cuts to 2025 guidance, partly because of weakness in China, but also on its home court.

Revenues in North America, Nike’s largest market, came in below market expectations at $5.28 billion and the company now expects sales to fall 10% in the current quarter amid ‘uneven consumer trends’ across its markets, including a decline in online sales and a poor performance from its Converse brand.

Savage competition in the athletic apparel market has sharp teeth so having previously guided towards full year 2025 sales growth, Beaverton-based Nike now forecasts sales to be down by mid-single digits.

The stock plunged more than 14% in after-hours trading (27 Jun), a sure sign that investors refuse to back hope of form improving anytime soon.


Logistics firm FedEx (FDX:NYSE) jumped more than 16% to 12-month high territory over the past week after the delivery giant posted better than expected fourth quarter earnings and guided for more of the same in fiscal 2025 (26 Jun).

Given its bellwether status, investors might have interpreted FedEx’s earnings surprise as a green tick for the global economy if it weren’t for the fact the company is undergoing a sweeping cost-cutting and restructuring programme.

Chief executive Raj Subramaniam confirmed the company was on track to deliver $4 billion of cost savings by the end of fiscal 2025 after notching up $1.8 billion in 2024.

Further cost savings of $2 billion are anticipated following the company’s DRIVE transformation programme, announced in April 2023, to consolidate air and ground services into a unified business amid activist pressure to improve performance.

Chief financial officer John Dietrich said the newly consolidated business is expected to be a big driver of margin improvement in 2025. The company guided for mid-single digit revenue growth and EPS (earnings per share) in the range of $20 to $22 implying a slight upgrade against consensus estimates of $20.92.


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Issue Date: 28 Jun 2024