Data center stocks knocked back amid China stress

The buy-everything-data-center-related trade is having a rough ride Tuesday, with Goldman Sachs’ themed basket of AI data center stocks dropping 1.5% in early trading after soaring more than 3.5% to start the week.

That’s partially because some suppliers of bits and bobs needed to fit out the hangar-like concrete structures selling computing power for AI are still exposed to risks of the China-US trade war, which seems to be flaring anew.

For instance, while most of the switches and routers Arista Networks sells are made in Malaysia, Vietnam, and Mexico, it also gets some products directly from China. The company is also reliant on supplies of some critical metals, exports of which China is clamping down on.

Such actions, the company has previously warned, could lead to disruptions to supplies of components it needs, manufacturing delays, and inventory shortages.

Other related stocks slumped in early trading, including hard disk data storage makers Seagate Technology Holdings and Western Digital — also exposed to Asian supply chains — and server maker Dell.

Chip giants Nvidia and Broadcom were also down more than 3% each after Advanced Micro Devices announced a new deal to deploy its chips in Oracle data centers.

While previous announcements to that effect lifted the AI sector as a whole, the AMD deal wasn’t enough offset the pall cast by the renewed China stress.