Super Micro's Stock is Headed for Its Worst Day in Two Months

Super Micro Computer Inc. is currently experiencing a significant downturn in its stock value, marking its most substantial decline in two months following an announcement regarding its upcoming earnings date, albeit without any preliminary results disclosed alongside.

‍

This turn of events contrasts sharply with the excitement generated last quarter, when the server manufacturer surprised Wall Street with preannounced results far surpassing expectations. This revelation was a notable moment for Super Micro, indicating its advantageous position amidst the heightened investment in artificial intelligence hardware.

‍

There was anticipation among investors that Super Micro might replicate its previous positive update prior to the official results. However, those hopes were dashed when the company released a statement on Friday morning merely setting the date for its next earnings report on April 30. Jordan Klein, an analyst at Mizuho, expressed disappointment, noting that the absence of a positive preannouncement raises doubts about the company's performance for the quarter.

‍

The stock has plummeted by 18.1% in Friday's morning trading session, marking its most significant single-day percentage decline since February 16, when it dropped by 20%. Concurrently, it has reached a low not seen in two months. Despite a remarkable 168% surge in value since the beginning of the year, Super Micro's recent price surge has left no margin for error, according to Klein. As a result, investors are now playing a waiting game until the official report is released, during which time hedge funds may short the stock, and retail traders are likely to reduce their exposure to risk.

‍

Klein does not perceive much support for the stock's valuation at its current levels. Meanwhile, Ananda Baruah, an analyst at Loop Capital, who recently increased his price target for the stock to $1,500, had anticipated a positive preannouncement. Super Micro had initially projected revenue in the range of $3.7 billion to $4.1 billion for the March quarter, but Baruah speculated that the actual figure could exceed $4.1 billion to $4.5 billion.

‍

In addition to Super Micro's decline, other chip stocks are also experiencing weakness in Friday's trading session. Shares of Arm Holdings PLC are down by nearly 8%, while Micron Technology Inc. has fallen by almost 4%. Likewise, Advanced Micro Devices Inc. and Nvidia Corp. are both witnessing declines of over 3%.

‍

The PHLX Semiconductor Index is also down by 1.9% for the day and has decreased by 7.2% for the week thus far. This puts it on track for its most substantial weekly decline since the week ending October 14, 2022, when it experienced an 8.3% drop.

‍