Artificial intelligence server stock Super Micro Computer, Inc. SMCI traded lower on Monday, following the broader semiconductor index selloff, which was led by key tech supplier Nvidia Corp NVDA.
What Happened: AI stocks, which have driven much of 2024’s market gains, are falling, CNBC reports.
These sector declines followed Friday’s disappointing July jobs report, which heightened recession worries and concerns that the Federal Reserve is slow to cut interest rates to stimulate the economy. Investors are shifting to a risk-off stance. AI stocks with high valuations are being sold off.
Semiconductors and AI chip stocks are jittery. Reports indicate Nvidia’s AI chip production issues could extend the delay by several months or more.
Nvidia and Super Micro share a close relationship, as per a Forbes report. Both CEOs, Charles Liang of Super Micro and Jensen Huang of Nvidia, immigrated to the U.S. from Taiwan. Liang founded Super Micro in 1993 and has collaborated with Nvidia for over 30 years.
Wedbush analyst Matt Bryson expressed optimism about Super Micro’s long-term AI growth prospects. He cites positive demand trends for H100 and H100 servers.
Super Micro Computer stock gained 66% in the last 12 months thanks to the AI frenzy.
Why It Matters: The AI server market worldwide is projected to reach $430 billion by 2033. That’s a significant increase from $31 billion in 2023, as per Statista. These AI servers are built to handle the rigorous requirements of AI applications like machine learning.
Investors can gain exposure to Super Micro through the Vanguard S&P 500 ETF VOO and iShares Core S&P 500 ETF IVV.
Price Action: SMCI shares traded lower by 7.00% at $580.13 at last check Monday.
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