Tech Selloff Leads to Slump for Super Micro and Nvidia as AI Winners Shine

Super Micro Computer Inc. and Nvidia Corp took a hit on Friday, leading a widespread tech selloff that wiped out billions in market capitalization. Super Micro, known for its AI equipment, saw a 23% drop, its largest since August, while Nvidia, a popular chipmaker, plummeted 10%, marking its steepest decline since the start of the pandemic.

Both companies, favored for their involvement in AI technology, had been outperforming year-to-date, with Super Micro up 151% and Nvidia up over 50% in 2024. However, the tech sector faced a significant downturn as investors shifted away from the once-popular AI trade.

Dennis Dick, a trader at Triple D Trading, commented on the situation, stating, “People seemed to think the AI trade would go up forever. It got crowded and now it is unwinding something fierce.” This sentiment was reflected in the market as Super Micro became the biggest decliner among S&P 500 components, despite only recently joining the index.

The drop in stock prices began after Super Micro announced its upcoming third-quarter results, scheduled for April 30. The lack of a positive preannouncement, along with missing an important AI datapoint, raised concerns among investors. Wells Fargo Securities noted that the absence of a positive update could be seen as a negative sign for the company.

As the tech sector continues to face challenges, with the Nasdaq 100 Index dropping 2.1% and geopolitical risks looming, the future remains uncertain for companies like Super Micro and Nvidia. Investors will be closely watching for any updates or developments that could impact the market further.