Source: BIT Securities

Is the storage chip sector currently at the bottom, or has it peaked?

Currently, there are two voices in the market, and both seem to make good points. Major storage stocks like SK Hynix, SanDisk, Micron, and Western Digital have gone through previous adjustments, and their stock prices are now stuck in an awkward position—whether upwards or downwards, it seems there is significant room left.

The latest earnings reports from SanDisk and Western Digital released a couple of days ago might just provide an answer to this question.

1. Explosive Earnings Reports, Yet Stock Prices Plummeted: This Time It's the "Expectations" That Got Killed

First, let's look at how impressive the earnings reports are.

On August 5, after the market closed, SanDisk reported Q4 results: revenue of $8.965 billion, a staggering 372% year-over-year increase, gross margin of 84.6%, and EPS far exceeding market expectations, alongside a $14 billion share buyback plan. Western Digital also performed excellently: its net profit for the fourth fiscal quarter surged more than 12 times year-over-year, and adjusted EPS reached $3.56, significantly surpassing market expectations.

However, after such outstanding performances were reported, the stock prices of both companies quickly fell, dragging the entire storage chip sector down again.

Where did the problem lie? Upon further examination of the earnings reports, it is found that while the revenue figures were excellent, the earnings guidance disappointed the market. In short, the catalyst for the decline was the lack of "better" performance.

This is a typical case of killing expectations. The market is no longer focused on whether profits are growing, but on whether profits can continue to exceed expectations significantly. Funds are trading ahead of a situation: the speed at which AI storage margins are rising is approaching its peak.

2. The First Possible Peak Warning Signal Has Already Appeared

And this may just be the first warning signal that the storage chip sector is peaking: while revenue has not yet peaked, the expectations reflected in various earnings reports have essentially peaked.

Note the subtlety of this signal—profit peaks have not yet been confirmed by earnings reports, but valuations have already begun to price in the peak. The market never waits for you to present concrete evidence; it trades on changes in slopes.

After the first signal appears, there are still several warning signals worth monitoring: when the increases in storage prices start to slow down, when gross margins begin to decline, and when cloud vendor orders start to be revised downwards. Any one of these three signals materializing would mean the fundamentals are peaking and beginning to be validated by data.

3. Can We Buy the Dip Now? Let's Look at NVIDIA's Past Journey

Since expectations have peaked, can we consider buying the dip?

If your idea of buying the dip is to go all-in, now is clearly not the time. The reason is simple: the peak signal for valuations has emerged, but the peak signal for fundamentals has not. And if you are considering going all-in for a dip buy, it may be helpful to learn from history and look at the growth curve of AI giant NVIDIA in previous years.

After the explosion of AI large models, the structural supply-demand imbalance of GPU computing power led to NVIDIA's stock price skyrocketing over tenfold in just over a year. During this period, its gross margin surged from 43% to 78% by April 2024, and then peaked. Afterwards, NVIDIA's stock price consolidated sideways for a year—although its gross margin recovered somewhat thereafter, it never broke through the new high, lingering around 75%. During this time, the slope of NVIDIA's stock price increase noticeably flattened, only slightly outperforming the broader market.

The storage stocks currently face a nearly identical situation. Over the past year, the gross margin of the storage sector increased from 50% to 80%, with significant fundamental improvements combined with speculative trading in the capital market, leading to stock prices soaring several times or even tens of times. Expecting to replicate a similar surge in the future is unrealistic.

What is the real signal for laying out positions? It is to wait until gross margins fall, expectations are driven back to the bottom, and valuations are sold off again. Only then can we talk about buying the dip.

4. In Conclusion: How Should We Trade in an Awkward Position Before Signals Are Confirmed?

To summarize: the peak of expectations has been seen, the peak of fundamentals has yet to arrive, and the time for an all-in moment has not come. This indicates that storage stocks are likely to oscillate in a "neither up nor down" range—every earnings report, every price data, and every cloud vendor order could trigger a dramatic rise or fall, while the direction remains uncertain before signals confirm.

This type of market is the most torturous: being out of position may lead to missing a rebound, heavy positions may risk being deeply trapped in a pullback, and going all-in is like betting your capital on a signal that has not yet appeared.

In the face of such an "unclear direction, highly volatile" situation, the options buying feature launched by BIT Securities precisely addresses the issue:

Whether it's betting on a further drop after earnings reports or speculating on an oversold rebound, you can participate with a small cost, with the maximum loss locked in as the premium at the moment of placing the order—before signals are confirmed, use limited costs to gain participation rights, instead of betting on direction with full principal.

The margin trading feature is prepared for "after signals are confirmed": when gross margins decline, and true bottom signals appear, there's no need to be trapped by the scale of principal; you can quickly increase your position to benefit from the recovery, fully utilizing the certainty gained from waiting.When market signals are still unclear, investors should thoroughly assess risks, combine their investment objectives, risk tolerance, and trading experience, and carefully choose whether to participate and what trading tools to use.

Disclaimer: The content of this article is written by an external author and only represents the author's personal views, not the stance of BIT, nor does it constitute any investment, legal, tax, or other professional advice. The securities, industries, and market analyses mentioned are for informational sharing only and do not constitute any investment advice or guarantee of future performance. Financial markets carry risks, and investments should be cautious; investors should independently judge and bear investment risks based on their individual circumstances.

免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。