Nvidia's stock stumbles on chip price fears, but its server partner Super Micro
Thesis
Even though Nvidia's own stock is having a tough time because some traders think chip prices will drop, companies that build the physical servers around those chips are still winning. Super Micro just secured a partnership with Nvidia, signaling to investors that their business is secure and growing. Because Super Micro relies on Nvidia's technology but sells complete systems, they might have an easier time protecting their profit margins even if raw chip prices fluctuate. This makes Super Micro an attractive way to invest in the AI hardware boom while sidestepping the direct pricing pressure Nvidia is currently facing.
Strategy approach
Build a relative strength long strategy that enters long SMCI when its daily RSI(14) exceeds 65 and its 5-day rate of change is at least 2% higher than NVDA's 5-day rate of change. Exit when SMCI RSI drops below 40 or after a 10-day hold period.