Super Micro Computer (SMCI +8.72%) stock is sinking in this week's trading. The high-performance server specialist's share price was down 12.7% from last week's close heading into this Friday's market opening, according to data from S&P Global Market Intelligence.
NASDAQ: SMCI
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Tech stocks continued to pull back this week as investors assessed risks related to geopolitical dynamics between the U.S., China, and Taiwan. Sell-offs intensified after Alphabet and Tesla published second-quarter reports that worried Wall Street. (GOOG 0.20%)(GOOGL 0.41%)(TSLA +0.96%)
While there wasn't any business-specific news dragging Supermicro lower, the company's valuation is getting hit in a pullback that's impacting the broader market and having a particularly pronounced impact on otherwise high-flying artificial intelligence (AI) stocks. The timing of the server specialist's addition to the Nasdaq-100 index also didn't help the stock this week.
Bearish ripple effects from earnings season hit Supermicro
In addition to geopolitical risk factors continuing to pressure growth stocks, earnings season has gotten off to a shaky start for the technology sector. Alphabet and Tesla reported Q2 earnings after the market closed on Tuesday, becoming the first of the highly influential "Magnificent Seven" companies to publish updated financial results. Unfortunately, Wall Street considered both reports to be duds -- and the disappointment created ripple effects that extended to Supermicro and other AI stocks.
Alphabet posted per-share earnings of $1.89 on revenue of $84.74 billion, which actually came in better than the average Wall Street target's call for per-share earnings of $$1.85 on sales of $84.29 billion. But the company guided for higher costs and weaker operating income margins in Q3, and investors adopted a more bearish stance in response.
Tesla's quarterly report was significantly more concerning. While Q2 revenue of $25.5 billion topped the average analyst estimate by $760 million, non-GAAP (adjusted) per-share earnings of $0.52 fell short of the market's target by $0.10 per share. Comments from management about the business's near-term outlook and spending plans also worried investors.
Joining the Nasdaq-100 index didn't boost Supermicro stock this week
Super Micro Computer was added to the Nasdaq-100 on July 22, and the timing of the addition may also be playing a role in this week's sell-offs. While being added to major indexes is often a bullish catalyst because it causes exchange-traded funds (ETFs) to buy the stock, it's actually a negative catalyst when the underlying index level and corresponding ETF prices are dropping. For reference, the Nasdaq-100 index has fallen roughly 4.5% over the last week of trading.
Investors who are eager for the next major, business-specific updates that could Supermicro's stock price won't have to wait long. The company is scheduled to report quarterly results after the market closes on Aug. 6.
