Super Micro Computer (SMCI 8.89%) stock headed lower Wednesday, trading down by 7.5% as of 1:38 p.m. ET, according to data from S&P Global Market Intelligence.
As macroeconomic concerns ticked up, artificial intelligence (AI) stocks broadly pulled back in Wednesday's trading. Adding another source of uncertainty into the mix, Nvidia is scheduled to report its fourth-quarter results after the market closes.
Nvidia's share price soared by 212% over the last year as the company's sales and earnings were buoyed by a rising tide of AI-driven demand, but investors appear worried that the stock may now be priced for perfection. The graphics processing unit (GPU) leader's Q4 results will likely have a significant near-term impact on Supermicro and other AI stocks, and investors are backing off the category a bit in order to minimize their risk.
Is it time to buy Super Micro Computer stock?
On the heels of recent sell-offs, Supermicro stock is now down roughly 29% from the peak it reached earlier this month. But no doubt about it, this is still a high-risk, high-reward play even after the recent valuation pullback.
Notably, the server and data storage company's share price was losing ground Wednesday despite very bullish analyst coverage that was published Tuesday. Rosenblatt's analyst team increased its one-year price target from $700 per share to $1,300 per share. From Supermicro's current stock price, that would amount to an upside of roughly 82.5% over the next year.
In their write-up, Rosenblatt's analysts pointed to the continued expansion of the AI-focused server market and the expectation of more market share gains for Supermicro as catalysts that would push its share price higher. The analysts also pointed to Supermicro's strengths in liquid-cooling technologies for servers as a potentially major performance catalyst.
AI investors are understandably a bit jumpy ahead of Nvidia's Q4 report. Whether bullish or bearish, the company's results and guidance will almost certainly have ripple effects for other companies in the space. Supermicro remains a risky stock, and it's likely that its share price will see big moves in the near future, but that volatility could present buying opportunities for long-term investors.
