Somewhere, someone got the idea that artificial intelligence (AI) was not looking as bright as it once was because Friday’s trading started a selloff of just about everything related to the sector. Leading the way down was chip stock Super Micro Computer (NASDAQ:SMCI), which lost over 18% in Friday afternoon’s trading and dragged down Nvidia (NASDAQ:NVDA) with it.
The impact of the selloff sent Super Micro down to its lowest levels in roughly two months. And while the losses were pronounced, there’s actually been a bit of a rally since, as shares were down as much as 20% at one point. Still, it’s worth noting that Super Micro shares are up about 160% year-over-year. The biggest problem, noted Triple D Trading’s Dennis Dick, is that the tech sector became a bit of a “safety trade” for a while, and now, that safety is starting to unravel.
Earnings Concerns?
Another key point to consider for Super Micro stock is that it will report earnings in about a week and a half: more specifically, on Tuesday, April 30. This announcement usually comes with a pre-announcement that earnings would come out better than expected. That’s happened the last seven out of eight times. This would be the eighth time, and there was no pre-announcement of an earnings beat. That’s wildly out of form, and is the first time in roughly two years this has happened. That’s likely got investors skittish, wondering if the end of the salad days has finally hit.
Is Super Micro Computer a Good Investment?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on SMCI stock based on seven Buys, three Holds, and one Sell assigned in the past three months, as indicated by the graphic below. After a 602.09% rally in its share price over the past year, the average SMCI price target of $965.64 per share implies 31.02% upside potential.
