A negative preannouncement from Super Micro Computer pulled down stocks tied to the buildout of data centers for artificial intelligence. SMCI stock and others fell on Wednesday.
Late Tuesday, the San Jose, Calif.-based company, better known as Supermicro, released preliminary March-quarter sales and earnings figures that were well below Wall Street's targets. Supermicro blamed the shortfall on customers shifting orders to the June quarter.
But investors took the news as another possible sign of a pullback in demand for AI data centers.
On the stock market today, SMCI stock dropped 11.5% to close at 31.86. Data center hardware peers Dell Technologies and Hewlett Packard Enterprise also retreated. Dell stock fell 2.2% to 91.76. HPE stock slid 0.6% to 16.22.
Meanwhile, shares of AI chipmaker Nvidia dipped a fraction to 108.92. Other AI chipmakers wavered on the news included Advanced Micro Devices, Broadcom and Marvell Technology.
At least three Wall Street firms cut their price targets on SMCI stock on the warning.
Most analysts said they believed the news was company-specific and does not reflect the broader market for AI data center demand.
"We don't believe the magnitude of the revenue miss relative to prior guidance to be representative of any industry-wide demand slowdown dynamic and similarly not related to any supply headwind, but more driven by specific customer decisions on platforms which shifted in relation to timing," JPMorgan analyst Samik Chatterjee said in a client note.
Chatterjee reiterated his neutral rating on Supermicro and cut his price target on SMCI stock to 36 from 39.
Supermicro Might Be Losing Market Share
Barclays analyst George Wang maintained his equal weight, or neutral, rating on SMCI stock and lowered his price target to 34 from 39.
"We think prior guidance from SMCI was too optimistic to begin with," Wang said in a client note. "There is too much uncertainty on AI server builds with lack of visibility into calendar 2025 as customers go through product transitions."
Rosenblatt Securities analyst Kevin Cassidy kept his buy rating on SMCI stock with a price target of 55.
"While we expect details to be disclosed during next week's earnings conference call, we see these issues as isolated to Supermicro," Cassidy said in a report. "This announcement does not change our view on the health of the AI data center market."
Evercore ISI analyst Amit Daryanani also believes the news is limited to Supermicro.
"At first glance, the well below consensus March-quarter results from SMCI raises concerns around hyperscale infrastructure demand, though we believe the results may be more company-specific, reflecting potential share loss," Daryanani said in a report.
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