What Happened?
A number of stocks fell in the morning session after the May jobs report showed a much larger-than-expected increase in payrolls, fueling concerns that the Federal Reserve will keep interest rates elevated for a longer period.
The Broadcom earnings overhang, which recalibrated expectations for the pace of AI chip revenue acceleration, carried into the day. Then a payrolls print of 172,000, more than double the 80,000 consensus, sent the 10-year yield above 4.5% and put rate hike expectations on the table. High-multiple hardware names carry the most valuation risk when the discount rate rises unexpectedly.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Hardware & Infrastructure company Super Micro (NASDAQ: SMCI) fell 8.5%. Is now the time to buy Super Micro? Access our full analysis report here, it’s free.
- Hardware & Infrastructure company Hewlett Packard Enterprise (NYSE: HPE) fell 6.5%. Is now the time to buy Hewlett Packard Enterprise? Access our full analysis report here, it’s free.
Zooming In On Super Micro (SMCI)
Super Micro’s shares are extremely volatile and have had 54 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 2 days ago when the stock dropped 6.6% on the news that the combination of rising oil prices, higher Treasury yields, and shifting rate expectations tightened the macro backdrop for corporate clients.
ADP's May payroll print (122,000 jobs added, above the 110,000 consensus) confirmed the labor market remains firm, but the data also pushed rate hike expectations higher, reducing the likelihood of the relief companies had been anticipating.
Adding to the weakness, GitLab announced it would cut approximately 14% of its workforce and exit 22 countries, signaling that enterprise clients continue to manage costs tightly even amid a broader market recovery. In a sector where spending depends on corporate confidence, higher-for-longer rates and geopolitical uncertainty are a direct headwind.
Super Micro is up 36.3% since the beginning of the year, but at $42.20 per share, it is still trading 30.5% below its 52-week high of $60.71 from July 2025. Investors who bought $1,000 worth of Super Micro’s shares 5 years ago would now be looking at an investment worth $11,404.
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