[Music] welcome back to morning trade live super micro saw a huge AI Le rally but has since tumbled what's next for the stock joining us for that is Stacy Sears portfolio manager of emerald advisor Stacy thanks so much for joining the show thank you for having me so if you just take a look at the year-to-date performance for super micro it looks a little impressive Shares are still up 45% year to date but if you take a look at the chart and see where it was trading back in March uh it's really had a Fall From Grace it's had a pretty flat performance I would call it since September though early September so is the worst behind super micro we've known super micro and have been investing at different times in the company over the better part of the last decade and I think you highlighted correctly that they were positioned very early to capitalize on the early stage server buildout for the AI infrastructure build their ability to customize work uh servers uh based on the workload requirements of the individual hyperscalers and do that with a very quick turnaround with that relationship that they had with Nvidia I think positioned them very early on as a market share Gainer uh we continue to believe that they're in a position to maintain and gain market share um as we move forward particularly with the nextg launch of Blackwell uh which is nvidia's next Generation chip they have a liquid cool in technology which we think is going to Advantage them um in this second leg of the AI buildout in the short term however you know the stock has been overshadowed by a delayed 10K filing there was an article in the Wall Street Journal uh in the last week or so about a potential doj investigation that has not been confirmed by the company at this point but we do think in the interim those issues are likely to overshadow the fundamental performance and would wait for some resolution of those of those certain factors before we would look to invest in super micro but we are very optimistic on the long-term fundamentals of the business and believe the valuation is attractive with where the shares are trading today um at you know right around 12 times forward earnings there was also that scathing short report as well so not a buying opportunity just yet until it it it crosses some of those hurdles uh but ultimately you see this name getting back to its highs you know back in March it was trading what near $120 a share that's correct I I think it's difficult to make an argument at this point that we're going to recapture that 50 billion in Market Market valuation in the near in the near term but we do think longer term based on resolution of these issues and again our belief that they're in a strong market share position that that that there is potential for them to recapture uh those levels in the next two to three years okay I was just taking a look median price Target on Wall Street has come down to $65 a share still implies you know $25 upside from here all right in terms of what you would buy right now it sounds like you like small cap stocks uh in particular biotech in the small cap space tell us why sure so we've been long-term investors in the biotechnology industry know as a firm we we've in invested in the resources internally biotech historically very idiosyncratic it's been an area that's been under pressure over the last couple of years uh particularly with the rise in interest rates the market has really leaned out of longer duration stocks concerns over cost of capital increases you know all the while why the market has really been looking in the other direction what we've been experiencing is a Prett pretty significant uptick in drug development and we're finding just a wealth of opportun in the space as the as these companies continue uh to progress against their clinical objectives so one of the names that we're looking at right now uh a position in our portfolio is a company by the name of wave Life Sciences uh they are developing uh RNA Therapeutics uh really Innovative we're out uh released results in the last week or so and a trial for duan's muscular distrophy uh that have really driven nice appreciation in in the shares uh we believe that this is the first of many forward Catalyst the company will be out later this year with the first in human uh Trials of an RNA uh editing technology uh for a disease called aatd which has uh liver and um lung manifestations uh this could be a real game Cher for the industry and then we see another Catalyst uh with a with an early stage trial in obesity uh that will also be getting underway as we move through this year so in aggregate very optimistic about the opportunities within the biotechnology industry the only issue wve is currently up 70% year-to date it's up about 3 and half% today so you would still buy at these levels yes we would uh we are again very optimistic and what the potential outcome of this uh new data again first in human trials and our a editing technology really has the potential to be revolutionary if successful biotech as you know is not without risk but the risk is an opportunity uh we believe the shares could trade toward $17 uh in value if the company is successful as we believe they will be in this proof of concept study at the B at the back half of this year all right so could potentially double you also have a pick in the tech AI small cap space and that's is it Credo technology group CR Doo tell us why you like this one because this is another one that's already seen impressive year-to-date gains up 54% year-to date it has you know I continue to believe we continue to believe internally as a firm that we're really in the early stages of the AI build out you know much like the early days of the internet you were really unable to maximize the utility of the internet with a dialup connection and I think we're in the same place with AI we really need to rearchitecturing infrastructure and Credo is a is Credo is a company that's contributing to that re architecture they have connectivity Technologies based on their proprietary cies um technology patent portfolio uh the main product of that today is is a product that is called active electrical cables these cables are used inside of the data centers to connect the servers within racks and amongst the racks we believe this is revolutionary it's replacing pack passive copper cables uh and we see a longtail opportunity not just with the active electric cable piece of the business but as the balance of the portfolio Optical dsps uh line card F uh in the ethernet area uh really start to accelerate so unlike super micro we believe that this company at this point in time is attractive opportunity well positioned and that growth rates will Accelerate from here does your bullishness in small caps mean that you think this is an economy on solid footing and that the FED can achieve this this soft Landing as we as we sit here today yes I mean and I think that's the key component um as to the success what we believe will be the forward success of small caps the FED has finally moved in our direction that has been a headwind over the last over the last couple years as they embarked on that R hiking cycle that's been a negative for the asset class the other piece that is been a negative for the asset class really has been that underlying earnings growth hasn't been there relative to large cap peers we feel like that's starting to inflect and with economy in a soft Landing or no Landing uh narrative right now which we have confidence in consumer seems to be hanging in there employment is softening but not overly weakening you know we're optimistic that with those two pieces coming together that we're going to start to see a revaluation in the small cap asset class which is underperformed for the better part of the last three years all right we have to leave it there Stacy Sears portfolio manager Emerald advisers thank you for your insights thank thank you for your picks thank you thank you for your time