High-flyer SMCI shares touched a record, then fell 20%

High-flyer SMCI shares touched a record, then fell 20%
High-flyer SMCI shares touched a record, then fell 20%

Shares of Super Micro Computer Inc. (SMCI) plummeted 20% after reaching a record high earlier in the day.

Shares of Super Micro Computer Inc. (SMCI.O.), which opened a new tab, fell 20% on Friday after reaching a record high earlier in the day as investors took a breather after betting on the company as a key benefactor of strong artificial intelligence technology demand.

After reaching a new record high of $1,077.87 early in Friday’s session, SMCI fell $200 to $803.32, halting a nine-day winning run and posting its largest one-day percentage fall since August.

According to LSEG data, the company’s busiest trading day since its IPO in 2007 was on Friday, with around 33.5 million shares changing hands.

In comparison, the Philadelphia semiconductor index (.SOX), which opened a new tab, lost 0.7% on Friday, bringing its year-to-date gains to about 8%. Even with Friday’s drop, SMCI was still more than 182% higher than its 2023 closing price of $284.26.

On Friday, Wells Fargo analyst Aaron Rakers began covering the stock with a price objective of $960 and an ‘equal weight’ rating, claiming that investors were already underestimating “solid upside” in the stock.

“SMCI’s AI-fueled fundamental momentum, underpinned by engineering-first differentiation, has been nothing less than remarkable and should support some sustainable valuation re-rate,” Rakers said in a note to the research team.

The median price objective for the stock is $635.29, according to the most recent LSEG data. This is more than 20% lower than Friday’s finish, but it compares to the median objective of $390 set on January 16.

On Thursday, SMCI surged 14% after BofA Global Research initiated coverage with a buy rating and a $1,040 price target, the highest among the 13 Wall Street analysts covering the business, according to LSEG data.

According to BofA, SMCI has established itself as an early launch partner for companies such as Nvidia (NVDA.O), which is considered the leading AI chip maker, Advanced Micro Devices (AMD.O), and Intel (INTC.O) for central processing units (CPUs) and graphic processor unit (GPU) accelerators.

Meanwhile, the stock’s remarkable gain over the last month has generated severely unfavorable technical warning flags.

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