Screaming man

The three technical charts raising jitters over the AI trade

Semis head and shoulders, Nvidia below the 50-day average, and September seasonality.

9/3/25 11:39AM

A soft start to September after a poor end to August has left the most important part of the stock market — everything related to AI — in a shakier state.

A Morgan Stanley basket of AI tech beneficiaries fell 5.5% over the past two sessions, its worst two-day drubbing since the sessions immediately following “Liberation Day” on April 2, when the extent of President Donald Trump’s reciprocal tariff regime was unveiled.

With Google and Apple roaring on Wednesday, the picture is a little brighter for the AI trade. But in the background, there are still three technical spots of bother with the complex that’s been critical to the US stock market’s gains for the past two years and counting.

Semiconductors are in a precarious position, with the VanEck Semiconductor ETF not too far away from completing a bearish head-and-shoulders top pattern recently flagged by Bank of America head of technical research Paul Ciana.

Zooming in on the most important semiconductor stock: Nvidia, the heart, soul, and many other body parts of the AI trade, closed below its 50-day moving average on Tuesday for the first time since May, when it was repairing damage done in the wake of the momentum meltdown and tariff angst that roiled markets.

Since the AI boom unofficially kicked off in May 2023, there have been only four previous instances where Nvidia had a fresh break below its 50-day moving average (that is, closing below that level for the first time in at least 21 sessions):

August 9, 2023
April 19, 2024
July 24, 2024
December 10, 2024

And now, yesterday. The good news is that breaching that technical threshold hasn’t been a big deal for Nvidia. One-month forward returns from the above dates have been strongly positive (up at least 7%) on three of four occasions, and the one loss was less than 2%.

But oh yeah, it’s September, a seasonally bad time for the stock market. Returns have varied widely for the Nasdaq 100 over the past 20 years, from up as much as 13% to down nearly 15%, but on average it’s been the only month with negative returns for the tech-heavy gauge.

“One needs to be pragmatic while at these levels, namely because the tape is not only following the Fed Cut script closely of buying the rumor to then sell the news, but also because divergences in momentum and breadth as well elevated levels of complacency, all of which leaves the market open to a violent, yet buyable dip opportunity,” wrote John Kolovos, chief technical market strategist at Macro Risk Advisors.

That being said, he’s still constructive on the medium-term technical picture for stocks through year-end and early into 2026.

Tasha Matsumoto

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AI server cluster maker Penguin Solutions takes flight

Small-cap AI server cluster maker Penguin Solutions surged Thursday after posting better-than-expected Q2 revenue and profit numbers Wednesday after the close, along with an increase in full-year sales and profit guidance.

The company, which was known as Smart Global Holdings until July 2024, has positioned itself as a provider of “end-to-end AI infrastructure solutions.”

Its Advanced Computing division designs and sells computers, cabling, and cooling systems, the server racks and clusters of racks AI data centers need. Its other main division sells flash and DRAM memory products.

It’s a pretty small company, with a fully diluted market cap of just over $1 billion and roughly 2,900 employees, according to FactSet.

The stock is volatile. Penguin dove during last year’s tariff tantrum that followed “Liberation Day” in April. Then it turned tail and doubled through early October amid a surge of call options activity, which tends to reflect retail interest. From the October peak, it then plunged by about 50%, before Thursday’s renaissance.

For what it’s worth, call options activity in Penguin is pretty busy today, too — relatively speaking — with roughly 2,625 traded as of 1:15 p.m. ET. That’s the most since early January, when the company last reported quarterly numbers. The average volume over the previous 25 trading sessions is about 325 calls a day, FactSet data shows.

Penguin Solutions Stock Takes Off On AI Bolstered Outlook

The company, which was known as Smart Global Holdings until July 2024, has positioned itself as a provider of “end-to-end AI infrastructure solutions.”

It’s a pretty small company, with a fully diluted market cap of just over $1 billion and roughly 2,900 employees, according to FactSet.

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Momentum returns to optics stocks as the release valve for AI optimism

Potentially imminent end to the war? Buy optics stocks.

Maybe not? Buy optics stocks anyway.

Effectively all the juice left in the AI trade is coming from optics (and memory) stocks. And the latter group is taking a bit of a breather today while the former continues to surge.

Shares of Ciena Corp., Lumentum, and Coherent are building on recent big gains and among the biggest gainers in the S&P 500 near midday, while Applied Optoelectronics is also surging on Thursday.

These companies all provide solutions that help information move around in data centers, and thus are key beneficiaries of the aggressive capex plans of hyperscalers. Nvidia has invested $2 billion apiece in Coherent and Lumentum in deals that also include purchase commitments.

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Space stocks rip during a topsy-turvy day for the equity market

Satellite-services-from-space stocks surged Thursday after reports that Amazon is in talks to buy Globalstar, which provides voice and connectivity services from its satellite network. It also can’t hurt that the general mood around space is ebullient, following the successful launch of Artemis II on Thursday.

Planet Labs and ViaSat also soared on the news.

The gains for EchoStar — seen as a backdoor play at pre-IPO SpaceX exposure — and Rocket Lab were more muted, perhaps because a deep-pocketed competitor like Jeff Bezos getting serious about space services could complicate the plans of the two largest commercial space launch companies.

Rocket Lab and SpaceX see launch services as key to their aspirations of being major providers of voice and data services from low-Earth orbit satellites.

Tesla CEO Elon Musk’s SpaceX is the dominant provider of such services, and the early rumors on the company’s planned IPO — expected to be the largest ever — suggest the market is very excited about the prospects for the industry.

Elsewhere in the space stock world, Intuitive Machines — a maker of space infrastructure that provides services to NASA for lunar missions — also rose.

Globalstar surges after FT reports that Amazon is in talks to buy the satellite group

Rocket Lab and SpaceX see launch services as key to their aspirations of being major providers of voice and data services from low-Earth orbit satellites.

Elsewhere in the space stock world, Intuitive Machines — a maker of space infrastructure that provides services to NASA for lunar missions — also rose.

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Balancing balls of different sizes on pink seesaws creating equilibrium