HomeBusinessWhy Super Microcomputer Stocks Are Falling Today

Why Super Microcomputer Stocks Are Falling Today

Super microcomputer (NASDAQ:SMCI) The stock is falling in Tuesday trading. The server technology specialist’s stock price fell 5.5% at 12:15 p.m. ET, according to data from S&P Global Market Intelligence.

While there’s no company-specific news today to send Supermicro shares lower, the company’s stock price is falling as investors weigh artificial intelligence (AI) risks. Investors in particular have become more cautious about companies in this category after reports emerged today Advanced micro devices will need to obtain a special export license for some of its AI processors.

The red-hot AI stock is taking a breather

Super Micro Computer stock has been on an incredible run, and it’s not surprising that investors are pushing the breaks a bit. Yesterday, shares of the server specialist posted explosive gains, closing the daily trading session up around 19%, after announcing the company would become part of the S&P500 index later this month. Today, investors must once again weigh a wrinkle in the increasingly complex relationship between the US and China – and what it means for the rapidly evolving AI space.

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Companies including AMD and Nvidia are currently blocked from selling their most advanced AI processors to China. In turn, AMD has specifically tailored processors that can be sold in the Chinese market.

Now it appears that AMD and other high-end processor designers may have another hoop to jump through if they want to do business in the Middle Kingdom. In response, investors today are taking a slightly more cautious approach to Supermicro and other high-profile AI stocks.

What does the politics of AI mean for Supermicro stock?

Access to advanced artificial intelligence technologies has become a critical national security issue. It is also a focal point fueling rising tensions between the US and China. The US and other Western allies have taken steps to limit China’s access to advanced processors and semiconductor manufacturing equipment.

It is possible that these developments could limit Supermicro’s growth potential in China and some other markets. The company uses Nvidia processors in its high-performance rack servers, and there is a risk that new regulations could limit some of its business opportunities.

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On the other hand, the company gets most of its revenue from US customers. US-China geopolitical relations are a broad-based risk to the stock market at the moment, but Supermicro’s operations actually seem quite isolated at the moment.

Should You Invest $1,000 in Super Micro Computer Now?

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Keith Noonan has no positions in the stocks mentioned. The Motley Fool holds positions in and recommends Advanced Micro Devices and Nvidia. The Motley Fool recommends Super Micro Computer. The Motley Fool has a disclosure policy.

Why Super Micro Computer Stock Is Falling Today was originally published by The Motley Fool

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