Super Micro Computer (SMCI) shares took a hit in after-hours trading on Tuesday after the company reported quarterly earnings that missed expectations. The server maker also issued a light profit forecast and disclosed a drop in adjusted gross margin due to the higher cost of transitioning to more expensive AI chips. This news caused the stock to slump more than 13%.
Investors have been bullish on Super Micro in recent years, believing that its servers would benefit from housing Nvidia’s graphics processing units (GPU’s) amid the growing demand for AI models and applications. However, concerns have arisen about order uncertainty as the company transitions to Nvidia’s pricier Blackwell AI chips. The stock is currently trading around 48% below its record close set in March.
Technical analysis of Super Micro’s chart shows that the stock broke down from a descending triangle last month and fell below the 200-day moving average. The recent spike in trading volume indicates that larger market players are repositioning themselves to manage post-earnings volatility risk.
Investors should keep an eye on key support levels for Super Micro shares. The first level to watch is around $496, where buying interest may kick in to fill a gap from earlier in the year. If the stock fails to hold this level, it could decline to around $357, where support may be found near a horizontal line connecting previous swing highs. A more significant correction could lead to a retest of the $260 region, where a trendline from previous trading levels may provide support.
Super Micro stock closed at $535.00 in after-hours trading on Tuesday. It will be interesting to see how the stock performs in the coming days as investors digest the latest earnings report and outlook for the company.
