Shares in Super Micro Computer Inc (SMCI.O) were down almost 12% on Friday after hitting a record high earlier in the session and closing Thursday's session up more than 250% for the year-to-date as investors have been betting on the stock as a big beneficiary of strong artificial intelligence technology demand.
After hitting a new record high of $1,077.87 early in Friday's session, SMCI last traded at $886.15, but still far above its trading price of $284.26 at the end of 2023.
Wells Fargo analyst Aaron Rakers started covering the stock on Friday with an equal weight rating, saying the shares were already discounting "solid upside".
"SMCI's AI-fueled fundamental momentum, underpinned by engineering-first differentiation, has been nothing less than remarkable and should support some sustainable valuation re-rate," said Rakers in a research note.
If SMCI closes lower on Friday it will snap a 9-day winning streak.
On Thursday SMCI jumped 14% after BofA Global Research had started coverage with a buy rating and a $1,040 price target, which is the highest among the 13 Wall Street analysts covering the company, per LSEG data.
BofA said SMCI had established itself as an early launch partner for the likes of Nvidia (NVDA.O), which is seen as the leading AI chip maker, Advanced Micro Devices <AMD.O and Intel (INTC.O) for central processing units (CPUs) and graphic processor unit (GPU) accelerators.
Meanwhile, the stock's strong rally over the past month has triggered extremely bearish warning signals from a technicals perspective.
Here is a snapshot of recent trading in SMCI shares:
