New York, Jan 20, 2026, 12:08 EST — Regular session
Shares of Super Micro Computer, Inc. (SMCI) dropped 4.2% to $31.28 in late morning trading Tuesday. The decline followed Citi analyst Asiya Merchant slashing the 12-month price target to $39 from $48 while maintaining a Hold rating, according to TipRanks.
The sell-off comes as investors retreat from risk, with Wall Street falling amid new tariff threats from President Donald Trump related to a spat over Greenland’s control. “We think we’ll settle down and realize this is just a negotiation tool,” said Jeff Buchbinder, chief equity strategist for LPL Financial. Reuters
Hardware isn’t immune to challenges. Morgan Stanley has downgraded North American IT hardware to “cautious,” citing cooling demand, rising component costs, and valuations it deems stretched as 2026 approaches. The analysts described the situation as “a ‘perfect storm’ of slowing demand, input cost inflation and rich valuations.” Reuters
Shares in AI and server-related stocks mostly slipped. Nvidia dropped roughly 3.5%, with Dell and Hewlett Packard Enterprise sliding around 5.7% and 4.5%, respectively.
Volatility picked up as investors sought hedges. “We’ve certainly seen a meaningful reaction in the risk metrics,” said Jim Carroll, senior wealth adviser and portfolio manager at Ballast Rock Private Wealth, though he noted it’s not a “hair on fire” situation just yet. Reuters
San Jose-based Super Micro, a maker of servers and storage systems tailored for data centers, has been ramping up its AI-focused rack offerings. In its latest quarterly report, the company revealed that delivery delays caused by configuration upgrades shifted roughly $1.5 billion in revenue into the December quarter. It also projected second-quarter revenue between $10 billion and $11 billion.
The setup works both ways. Should tariff headlines ease and the broader market stabilize, high-beta hardware stocks such as SMCI could bounce back quickly. But if trade tensions escalate into concrete policy, investors are likely to continue selling off anything tied to enterprise budgets and component expenses.
Traders are keeping an eye on whether additional brokers will issue downgrades and cut targets, and if big AI infrastructure orders start to falter as buyers rethink their budgets. For a stock that reacts sharply to news, even a brief lull can have an impact.
Markets will shift focus to Thursday’s Personal Consumption Expenditures price index report, a crucial inflation measure watched closely by the Federal Reserve, set for Jan. 22. Then on Friday, Jan. 23, S&P Global’s flash PMI readings will roll out.
