Semiconductor, hardware, and artificial intelligence-linked stocks led by Nvidia Corp (NASDAQ: NVDA) are down as the sector continues to pull back.AI stocks led by Nvidia, Advanced Micro Devices, Inc (NASDAQ: AMD), and Taiwan Semiconductor Manufacturing Co (NYSE: TSM) selloff continue their downward price trajectory as the Nvidia and Broadcom Inc (NASDAQ: AVGO) quarterly prints failed to impress the Street.
Super Micro Computer Inc (NASDAQ: SMCI) stock price tanked after JP Morgan analyst Samik Chatterjee downgraded the rating from Overweight to Neutral and lowered its price target from $950 to $500.
While the latest filings indicate that the company is working diligently to comply with regulatory requirements and that business is continuing as usual, Chatterjee noted that it is tough to get more visibility when the company is back in compliance with its filing requirements.
The analyst noted the Hindenburg report and the delay in the 10-K filing as separate events in themselves but expects the lack of visibility about the timing of the company's return to compliance to create challenges to near-term sentiment about outcomes compared to the 2017-2020 time period and the severity of impact on financials.
Therefore, he recommended that new investors remain on the sidelines. Additionally, the analyst noted that Super Micro's follow-up response to ensure an unchanged demand pipeline could involve higher price aggression, and the expectations for timing around the recovery of margins towards the long-term range would be a watch-point for investors over the next couple of quarters.
The price target cut reflects lower earnings multiple in line with traditional IT Hardware companies, which have much lower growth trajectories to account for the uncertainty.
