Good morning contrarians! Welcome to the Daily Contrarian, our morning look at events likely to move markets. It is Wednesday, Aug. 6, 2025. Today’s Stocks On The Contrarian Radar©️ segment features ICHR and starts at the bottom of this page.

Read how the Contrarian Investment Portfolio produced a positive return for the third straight month and how it is being positioned.

State of Play

After a tumultuous last week, the first couple of trading days of this week have been relatively quiet. Last night saw disappointing earnings from AMD and SMCI but this morning’s results were more positive. As we eye or board of indicators for signs of direction at 0830 ET, a little bit of ‘risk on’ is emerging:

* Stock index futures are up a bit. Nasdaq and S&P 500 +0.3% each;

* Commodities are rebounding:

* WTI crude oil +1.5% to trade around $66/barrel

* Copper +0.7%

* Gold and silver -0.5% each

* Bonds are seeing a little bit of selling, consistent with ‘risk on’ as the 10-year yield is +3 basis points to 4.23% (yields move inversely to prices);

* Cryptos are not going along with this, or not yet. Bitcoin -0.5% to trade around $114,200.

Today’s Known Events

It’s all about earnings. Already reporting this morning were:

* Uber (UBER ) beat estimates and announced a share buyback but doesn’t appear to have impressed investors as the stock is down a bit in the pre-market;

* Shopify (SHOP ) beat analyst estimates and that report is being treated much more enthusiastically as the stock is +16% this morning;

* Oscar Health (OSCR ), briefly a meme stock, reported disappointing results and the stock is down by ~2%;

* Disney (DIS ) results were mixed and the stock is dropping a bit;

* McDonald’s (MCD ) beat estimates and is rising (+3%).

After the close at 1600 we’ll hear from:

* AppLovin (APP ), probably a pretty good reflection of the tech industry and also the gig economy;

* Airbnb (ABNB ), a solid indicator of the travel sector;

* DoorDash (DASH ), always a good gauge of discretionary spending (if people are willing to pay ridiculous fees to indulge their own laziness…)

* Lyft (LYFT ), which according to the reaction to Uber earnings has quite a high bar…

The Bottom Line

Earnings this morning were mostly positive. Shopify was particularly encouraging as this speaks to continued growth from small retailers, which reflects positively on the economy. The fact that AI applications are helping its bottom line (or at least its outlook) is even better. We’ve said for some time that AI spending can lift many boats. If it is actually producing results then that’s even better. This should offset the earnings miss from AMD, but it’s worth pointing out that AMD actually raised guidance.

Crucially, from a big-picture perspective there was nothing in this latest round of earnings that speak to weakness in the economy: McDonald’s is opening restaurants, Disney theme parks are booked solid, and even the New York Times (NYT ) is growing subscriptions revenue.

Sure, there is the tariff overhang and ample unpredictability from the White House. Those were a major concern last week. Now, not so much. Just like you were reminded, these fears often fade away as quickly as they surface.

Stocks On The Contrarian Radar©️

The Contrarian has maintained a list, going back more than a year, of ‘undiscovered’ AI chip stocks. The ‘undiscovered’ in ‘air quotes’ because these are, of course, not really undiscovered at all — they just haven’t attracted much (or any) of the hype associated with the Nvidias of the world.

Yesterday’s trading session saw the dramatic drop of one of these names, Ichor Holdings (ICHR ), which manufactures fluid delivery subsystems for the semiconductor industry. This sounds like a crucial part of the whole semiconductor supply chain even if it does not make ICHR a chip manufacturer itself. Well, the stock fell by 30% yesterday after reporting earnings that disappointed investors on a number of fronts.

At issue was not so much earnings. EPS did fall short of analyst estimates but revenues surpassed what was anticipated. That’s not what caused the drop. The concerns were elsewhere:

* Margins and revenue guidance came in at the lower end of expectations

* The company is experiencing hiring pressures, limiting its ability to expand margins

* Management’s tone on the call was at times quite conservative. The dreaded ‘plateauing’ phrase was used, referring to its crucial advanced packaging business

* Finally, executive leadership is in transition with the company actively searching for a new CEO

Add it all up and investors took the opportunity to punish the stock, sending it to its lowest level in almost a decade:

It’s interesting to hold this thing up against Nvidia (NVDA ), which is very much the bellwether for the AI chip industry. As you can see there has been a clear divergence since April:

Shouldn’t ICHR track NVDA over time and therefore wouldn’t it revert to this pattern at some point, hopefully soon?

That aside, the kind of selloff we witnessed yesterday is the type of thing that gets The Contrarian to take notice. It leaves ICHR trading at a compelling 0.9x forward sales, which is almost unheard of for a technology company especially one servicing the AI chip sector. The balance sheet appears healthy, with $92 million of cash versus total debt of $126m.

There is undoubtedly some uncertainty facing this company. GAAP earnings-per-share was negative last quarter. Margin pressures are real. The customer base is concentrated with three OEMs — Applied Materials, Lam Research, and ASML Holding — making up 73% of sales. The leadership transition is also a very real concern.

The Opportunity

Still, one can’t help but think that this was a classic — and violent — overreaction. One figures ICHR’s products are crucial to semiconductor manufacturing and demand for semiconductors — as we have seen from tech earnings — is not going anywhere but up. The company’s issues are in large part due to not being able to keep up with this demand. That is not a bad problem to have.

The turnaround may take some time. There’s no guarantee it will even happen. The notoriously cyclical semiconductor industry could turn before management is able to get its ducks in a row. These are all risks. But with risks come opportunity.

The Verdict

For these reasons The Contrarian took a tiny starter position in ICHR yesterday, buying in at $14.25. He will look to add to this if it drops more.

Housekeeping

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