Shares of server solutions provider Super Micro (NASDAQ:SMCI) jumped 3.3% in the afternoon session after the company, in collaboration with Intel and Micron, announced record-breaking results for a key performance benchmark used in the financial industry. The results were for the STAC-M3 benchmark, a test that measured the performance of databases used for tasks like algorithmic trading and backtesting. Supermicro’s Petascale servers, using Intel Xeon 6 processors and Micron memory, set new world records on 19 of 24 benchmarks designed to measure response times. The system also completed one compute-intensive benchmark 36% faster than the previous record holder while using 62% fewer CPU cores. For financial firms, these faster query times could speed up the testing of algorithms and allow for a greater number of trading strategies to be evaluated.
After the initial pop the shares cooled down to $53.37, up 3.5% from previous close.
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What Is The Market Telling Us
Super Micro’s shares are extremely volatile and have had 86 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 6 days ago when the stock dropped 7.1% on the news that new trade tensions and disappointing earnings from major tech companies weighed heavily on investor sentiment.
A key driver was the news that the White House is considering new restrictions on Chinese exports that use U.S. software, a move that could significantly impact technology companies. This uncertainty over escalating trade tensions created a broad sense of worry in the market. Simultaneously, shares of the semiconductor giant Texas Instruments dropped 6% after its latest earnings and future revenue forecast both came in weaker than expected, which is a big concern for the health of the tech industry. This poor performance from Texas Instruments immediately dragged down the entire semiconductor sector, causing other major chipmakers like Advanced Micro Devices and Micron Technology to also see significant declines.
Compounding the bad news, streaming service Netflix saw its stock slump 9% after it missed its earnings targets, partly blaming a tax dispute in Brazil. The combined effect of renewed trade war fears and the direct evidence of underperformance from influential companies in the technology sector was enough to push the major market indexes lower.
