Super Micro Computer (NASDAQ: SMCI) stock is falling in Monday's trading. The server specialist's share price was down 5.3% as of 12:45 p.m. ET and had been down as much as 11% earlier in the daily session. Meanwhile, the S&P 500 index was down 0.2%, and the Nasdaq Composite index was down 0.8%.
Supermicro stock is falling today in conjunction with news that the U.S. plans to roll out new restrictions on artificial intelligence (AI) chips. In order to bolster the competitive positioning of America and its allies in the tech category, the U.S. government has said it will put new regulations in place that limit AI chips being exported to countries including China, Russia, Iran, and North Korea.
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White House officials announced today that the U.S. plans to expand restrictions to prevent advanced AI chips and semiconductor manufacturing equipment from being sold to China and other adversarial nations. Access to advanced artificial intelligence hardware and software has become a vital national security interest, and the U.S. is trying to strengthen its position in the space and limit advances for its geopolitical rivals.
Supermicro has become a leading player in the AI server space. It's one of Nvidia's biggest customers, and it uses the AI leader's advanced GPUs as the core hardware component in its high-performance rack servers for AI data centers. The expanded restrictions on AI hardware exports could close off growth avenues for Supermicro, and there are other risks related to regulations and rising geopolitical tensions that investors should consider.
Supermicro has said that it will publish its delayed 10-K report before Feb. 25. With accounting issues and bearish speculation surrounding the server specialist, the company's stock could soar if the report shows that business performance is in line with its previously stated results. On the other hand, the stock could crater if the 10-K filing shows that the company had to issue downward revisions for its previously reported results. But that's not the only potentially major catalyst for the stock on the horizon.
The U.S. has reportedly launched an investigation to determine how Nvidia chips that were banned from being exported to China wound up in the country, and investigators are said to be looking into Supermicro as part of the probe. With AI taking center stage in rising tensions between the two competing world powers, geopolitical dynamics could play a significant role in Supermicro's stock performance.
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.