Shares of ACM Research (ACMR -4.42%) were falling sharply today in a broad-based sell-off in artificial intelligence (AI) stocks following Nvidia's GTC Conference kickoff yesterday as the "sell-the-news" event seemed to lead to some of the air coming out of the AI rally. Additionally, ACM also announced a shelf offering, setting it up to sell new shares, though it didn't say how much it was planning to sell.
Investors tend to react poorly to secondary offerings as they dilute existing shareholders and may signal that the company thinks the stock value is worth taking advantage of due to its high price. As of 11:54 a.m. ET, the stock was down 10.7%.
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AI stocks lose some air
ACM Research, which makes specialized equipment for cleaning semiconductor wafers, has emerged as one way to play the AI boom. The company has seen strong revenue growth in recent quarters and should benefit from the surge in demand for advanced chips.
In that light, selling new shares makes sense since ACM needs to fund its research and development (R&D) and equipment buildouts and meet increasing demand.
The sell-off also seems to be a response to broader declines in AI stocks as several closely watched AI names were down following Nvidia's keynote address last night. Although the company announced several new products, including its new Blackwell platform, investors took it as an opportunity for profit-taking. There's some concern that AI stocks have gotten overheated, despite massive growth in the sector.
What's next for ACM Research?
Investors should keep an eye out for an update on the secondary offering, as that's likely to move the stock. ACM also announced a private offering of up to $625 million in the fourth quarter to fund R&D, capital expenditures, and working capital, so it's not surprising that it would tap the public markets, as well.
In the meantime, ACM Research seems well-positioned for future gains after revenue grew 43% last year. With a price-to-earnings ratio of just 22, the stock still has lots of upside potential from here.
