(Bloomberg) — Super Micro Computer Inc. shares are seeing their biggest drop in about two months on Friday, leading a sharp decline among technology stocks with exposure to artificial intelligence.
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The maker of servers sank as much as 20%, its biggest intraday drop since August. The stock is also trading at its lowest since February. Shares of the company, a favorite play on artificial intelligence, have lost more than a third of their value since a March peak, though they remain up about 160% this year.
Super Micro was by far the day’s biggest decliner among components of the S&P 500, an index it joined just last month. However, tech stocks were broadly lower on Friday, extending a recent bout of weakness. The Nasdaq 100 Index dropped 1.9%, with geopolitical risks contributing to its fourth straight negative week.
“People seemed to think the AI trade would go up forever. It got crowded and now it is unwinding something fierce,” said Dennis Dick, a proprietary trader at Triple D Trading. “This is just a tech wreck, a rotation out of tech and the idea of tech as a safety trade. The AI trade in particular is unwinding.”
AI stocks were especially weak, even as they remain year-to-date outperformers. Nvidia Corp dropped 4.4% and is on track to close below its 50-day moving average for the first time since November. Dell Technologies Inc, which like Super Micro makes equipment to handle AI work, dropped 2.1%.
The drop started on Friday after Super Micro announced its third-quarter results would be released April 30. However, it didn’t pre-announce, as it had in January, when strong preliminary results sparked the stock’s 2024 rally.
Super Micro did not give a “positive preannouncement, which is being considered a negative,” along with an important AI datapoint, wrote Wells Fargo Securities. The firm has an equal weight rating on the stock.
Dick suggested this could be adding to the day’s concerns. “I think if they were going to blow it away again, they probably would have said something. So that is maybe concerning a little bit.”
The company didn’t return a request for comment.
(Updates trading, add comments from trader.)
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