💰 The market is undergoing slight adjustments, with performance at the forefront, although sometimes there can be excessive reactions.
💹 $COHERENT(COHR)$/$Lumentum(LITE)$/$Celestica(CLS)$: The buoyancy in AI investments boosts stock performance.
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On Monday and Tuesday, major U.S. stock indices experienced slight declines, marking two consecutive days of losses, with $S&P 500(.SPX)$ ending its nine-day winning streak from last week.
On Tuesday, Chinese assets rose, with $NASDAQ Golden Dragon China Index(HXC)$ closing up 0.42%. The autonomous driving company $Pony AI Inc(PONY)$ surged over 47% due to its collaboration with Uber, while $WeRide Inc.(WRD)$ climbed nearly 32% (with nearly a 13% increase in after-hours trading).
Megacaps - techs vs headwind
Most big techs declined, with $Tesla Motors(TSLA)$ falling over 1% due to a significant drop in sales in April in the UK, facing severe challenges in the European market. Upon returning to the company, Musk has been actively pursuing new business ventures. Recently revealed aerial images show a large number of mysterious castings piled up in the Texas Gigafactory, speculated to belong to the upcoming Cybercab, which aims for an annual production target of 2 million vehicles by 2026. $Tesla Motors(TSLA)$ rose 1.4% in pre-market trading today.
$Netflix(NFLX)$ saw a modest increase, with slight gains in pre-market trading. The previously announced film tariffs had a limited short-term impact on the company’s stock price.
MAGA - aftermath
$Palantir Technologies Inc.(PLTR)$ declined over 12%, marking its worst single-day performance in a year. On Tuesday, PLTR's trading amount exceeded $21 billion, surpassing TSLA and NVDA to become the highest traded stock that evening, a rare occurrence. The market did not take the company's strong performance into account, believing that current valuations already reflect high growth expectations, leading to sell-offs in the absence of further "surprises." Regardless of the heightened panic, such a staggering drop indicates room for a price correction, with pre-market trading showing a nearly 1% increase.
$Hims & Hers Health Inc.(HIMS)$ rose 18.12%, with trading amount exceeding that of META and MSFT. The company reported better-than-expected results due to surging sales and user growth, having increased over 100% year-to-date. It is noteworthy that the company's performance guidance has turned conservative, leading to a pre-market decline of over 1%.
Top movers - nuclear, gold
The White House plans to sign an executive order to expedite the deployment of nuclear reactors. Nuclear power stocks like $Constellation Energy Corp(CEG)$ surged over 10%, while $Oklo Inc.(OKLO)$ rose 12.5%.
Asian investors are selling off the dollar, and risk-averse sentiment has pushed spot gold to challenge the psychological level of $3,400, with $DRDGold(DRD)$ up 5%, $Sibanye(SBSW)$ up 5%, and $Wheaton Precious Metals(WPM)$ up 3%. Due to profit-taking, gold briefly fell but still maintains a predominantly bullish trend.
Benefiting from expectations of an economic downturn and increased demand for gig economy workers, $Upwork Inc.(UPWK)$ surged 18% due to results that far exceeded expectations.
| Out of the haze
Initially pessimistic due to tariff impacts, the market for optic transceivers has recently rebounded after hitting the bottom, with gains extending for over two weeks. Earnings from leading optical module companies reflect that the actual market situation is better than anticipated, suggesting further upside potential.
Demand for optic transceivers is robust, driven by increased capex from large tech companies. Cloud and AI providers like AWS, Meta, Oracle, and xAI are expected to see explosive growth in high-end optical module procurement starting in Q2, likely continuing into the first half of next year. With supply not meeting demand, optic transceiver manufacturers are facing tight capacities and are gradually expanding production.
The impact of tariffs has largely dissipated, signaling an exit from emotional lows. Despite previous tariff pressures, recent tariff exemptions may provide some relief for the U.S. optic transceiver industry in the short term. With stable demand, even with tariff-related impacts, prices can still be passed down to downstream companies, ensuring their performance.
| Where the light touches
The market is at a crucial juncture of repricing. Amid volatility, it tests the steadiness of asset allocation and the foresight of strategies.
COHR
$COHERENT(COHR)$ primarily offers high-performance optical solutions, including optical modules, lasers, and amplifiers, widely applied in data centers, communications, autonomous driving, healthcare, and industrial sectors.
COHR emphasizes innovation and precision optical components, particularly in high-speed data transmission and precision optics, benefiting from major data center operators like Google and Microsoft.
Over the past 20 days, COHR’s stock price has risen by 32%. The company achieved a 15% revenue growth last year, a 66% increase compared to three years ago, demonstrating a strong revenue growth momentum.
LITE
$Lumentum(LITE)$ provides a variety of optical modules, lasers, and optical solutions, focusing on technologies related to data communications, laser scanning, and optical metrology. Lumentum holds a significant market share in optical communication devices.
LITE’s technology is widely utilized by major companies such as Amazon AWS, Microsoft Azure, and Facebook. Particularly in the area of optical modules and optical communication technology for data centers, LITE provides critical support to these cloud computing giants.
In the first three quarters of its fiscal year 2025, LITE showed significant financial improvement, with gross sales margins rising from 19.05% in the same period last year to 31.17%, and net margins narrowing from -27.98% to -16.1%.
CLS
$Celestica(CLS)$ assists large global enterprises in manufacturing high-performance computing and networking equipment, especially in the AI and data center fields.
The ongoing investments from megacaps are expanding artificial intelligence infrastructure, creating long-term growth potential for the company. In Q1 2025, the company reported revenues of $2.65 billion, a 19.9% year-on-year increase, exceeding expectations, and raised its annual performance guidance.
Over the past 20 days, CLS’s stock price has risen by 35%, reflecting the ongoing optimism in AI investments for this infrastructure equipment provider.
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