This article first appeared on GuruFocus.
Super Micro Computer (SMCI) shares dropped nearly 8% Monday as renewed concerns over artificial intelligence spending pressured the broader technology sector.
Investor attention has shifted toward whether AI companies could moderate spending as debate grows over the pace and safety of developing advanced AI systems. A slower investment cycle could create challenges for companies supplying the hardware needed to build data centers.
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That risk is relevant to Super Micro because the company provides server and rack-scale systems for AI computing deployments. A pullback in capital spending by cloud and AI operators could therefore affect demand for its products.
Despite Monday's weakness, the stock remained above its 50-day and 200-day moving averages. Citigroup has a $39 target, while Goldman Sachs and Mizuho have targets of $34 and $35, respectively.