AI-Related Stocks Slump in Super Micro Computer’s Wake

Major U.S. equities indexes were mixed on Friday, closing out a week that saw stocks come under pressure as rate-cut expectations receded and investors reacted to a mixed bag of earnings reports.

The S&P 500 dropped 0.9%, closing below the 5,000 level for the first time since February. Persistent declines in the tech sector dragged on the Nasdaq, which slipped 2.1%. The Dow closed in positive territory for the second straight day, with strength in financials and health care helping lift the blue-chip index 0.6%.

Shares of Super Micro Computer (SMCI) plunged 23.1%, the steepest loss among S&P 500 stocks. The server and data storage provider failed to make an announcement ahead of its fiscal third-quarter results. Wells Fargo analysts pointed out that Super Micro has a track record of indicating positive results ahead of time, so the lack of a preannouncement lowers the likelihood of blowout earnings driven by artificial intelligence (AI) opportunities.

Beyond the downdraft for Super Micro Computer, a less optimistic AI outlook pressured other stocks that have benefitted from their connections to the technology. Shares of AI chip behemoth Nvidia (NVDA) dropped 10.0%. Fellow semiconductor stocks Advanced Micro Devices (AMD), Micron Technology (MU), and Broadcom (AVGO), and fell 5.4%, 4.6%, and 4.3%, respectively.

Shares of Netflix (NFLX) tumbled 9.1% after the streaming platform released weaker-than-expected revenue guidance. Although the company exceeded revenue and profit forecasts and achieved strong subscriber growth, impacts from the crackdown on password sharing and the lower-cost advertising tier remain uncertain. Netflix also announced it would stop reporting quarterly subscriber numbers starting in 2025.

Paramount Global (PARA) shares logged Friday’s top performance in the S&P 500, soaring 13.4%. The gains followed reports that Sony Group’s (SONY) studio division was in talks with Apollo Global Management about a possible joint bid for Paramount. The two suitors have yet to submit a formal offer, as Paramount remains in exclusive merger negotiations with Skydance Media.

American Express (AXP) shares added 6.2% after the financial services firm reported better-than-expected sales and profits for the first quarter. Unlike numerous peers in the financial sector, the payment card issuer beat forecasts with its net interest income for the quarter. According to the CEO, American Express has been successful in attracting high-spending customers with good credit quality.

Shares of Fifth Third Bancorp (FITB) gained 5.9% after the Cincinnati-based lender’s first-quarter revenue and earnings exceeded forecasts. A drop in adjusted expenses during the quarter suggested that the regional bank’s management has seen some success in its initiatives to increase efficiency.