(Bloomberg) — Super Micro Computer and Nvidia fell sharply on Friday, with the two leading AI companies leading a broad decline in technology stocks.
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The maker of equipment that processes artificial intelligence tasks fell 23%, its biggest decline since August, and closed at a two-month low. Chipmaker Nvidia's 10% drop marked its steepest decline since the start of the pandemic in March 2020, and the stock closed below its 50-day moving average for the first time since November. The recession wiped out nearly $212 billion in market capitalization.
Both are my favorite plays on AI and are still outperforming year-to-date. Supermicro is up 151% this year, despite falling about 40% from its March peak. Nvidia will continue to rise by more than 50% in 2024. Dell Technologies Inc, which like Super Micro makes servers used in AI, fell 3% on Friday but remains up 50% this year.
“It seems like people thought AI trade was going to rise forever. It was crowded, but now it's coming back full force,” said Dennis Dick, self-employed trader at Triple D Trading. “This is just a technology disaster, a rotation away from technology, the idea of seeing technology as safe trade. AI trade in particular is rolling back.”
Super Micro, which was added to the S&P 500 Index only last month, had the biggest decline on the day, dropping 0.9%. However, tech stocks led the decline, continuing the recent weakness. The Nasdaq 100 Index fell 2.1%, falling for the fourth straight week due to geopolitical risks.
The decline began on Friday after Supermicro announced it would report its third-quarter results on April 30th. But the company did not make an advance announcement, as it did in January, when strong preliminary results triggered a rally in 2024 stock prices.
Supermicro did not make “pre-positive announcements that were considered negative” along with key AI data points, Wells Fargo Securities wrote. The company gives the stock an equal weight rating.
Mr Dick suggested this could add to the concerns of the day. “If they were going to blow it up again, I think they probably would have said something. So that might be a little concerning.”
The company declined to comment.
—With assistance from Brandon Harden.
(Update on market close.)
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