Super Micro Computer Stock: Volatility Amid AI Boom and Potential Stock Split

What's Going On With Super Micro Computer Shares Today? - Super Micro Computer (NASDAQ:SMCI)

Earlier this week, Super Micro Computer gained attention after being announced as a new member of the Nasdaq-100 Index Shares of Super Micro Computer, Inc. SMCI are trading lower on Thursday. The decline is part of a broader selloff in the semiconductor and hardware sectors, which have been experiencing volatility despite gaining momentum earlier this year due to advancements in AI technology. What's Going On: Super Micro Computer gained attention earlier this week following the announcement that it will join the Nasdaq-100 Index and the Nasdaq-100 Equal Weighted Index, replacing Walgreens Boots Alliance Inc. CEO Charles Liang discussed the company's environmentally friendly initiatives and AI-driven growth prospects in an interview with CNBC's Jim Cramer. Liang emphasized the potential of their "liquid cooling" and "green computer" technologies to reduce carbon footprints and lower customer costs. He also expressed optimism about the AI revolution, predicting it could surpass the industrial revolution in impact. What Else: Notably, options trading for Super Micro Computer has seen a mix of bullish and bearish sentiments. Analysts have targeted a price window between $765 and $1100, with significant trades observed in both call and put options. SMCI Price Action: Super Micro Computer shares were down by 1.92% at $800.69 according to Benzinga pro. See Also: What's Going On With ON Semiconductor Stock? Photo via Company. Market News and Data brought to you by Benzinga APIs

Should You Buy Super Micro Computer Stock Before July 22?

Super Micro Computer (SMCI) has been among the hottest stocks in recent years, as it is part of the artificial intelligence (AI) boom. SMCI develops and manufactures high-performance server and storage solutions based on modern and open architecture, with a focus on liquid cooling technology. The company has increased its revenue from $3.33 billion in fiscal 2020 (ended in June) to $11.81 billion in the last 12 months, powered by strong demand for its products and services. Valued at a market cap of $50.2 billion, SMCI stock has returned a staggering 968% since the start of 2023 and is up over 3,330% in the last decade. Let's see if you should buy this tech stock at the current valuation. Now, SMCI will be added to the Nasdaq-100 Index ($IUXX) as of July 22, replacing Walgreens Boots Alliance (WBA). The Nasdaq-100 Index consists of the 100 largest non-financial companies listed on the Nasdaq exchange, and the recent changes in index membership showcases SMCI's stellar growth. Additionally, the company's inclusion in the Nasdaq-100 should increase buying demand, as it will be purchased by mutual funds and exchange-traded funds (ETFs) that track the index. Typically, a company announces a stock split to make it more affordable to retail investors, as this action lowers the share price and increases the number of outstanding shares. In other words, the fundamentals remain the same, but a stock split is often viewed as a positive corporate action that broadens the pool of potential buyers, and can results in higher liquidity. SMCI stock trades at $876 at the time of writing, so a 10-for-1 stock split would reduce its price to less than $90 per share. Is SMCI Stock a Good Buy? Super Micro Computer specializes in IT infrastructure and designs solutions for high-performance graphics processing units, or GPUs. The demand for GPUs has skyrocketed in the last two years, as they power AI platforms - such as ChatGPT. At the end of 2023, SMCI forecast fiscal Q2 of 2024 sales at $3.6 billion, up from its earlier forecast of $2.8 billion. Ultimately, it reported sales of $3.65 billion, up 103% year over year. Its top-line growth accelerated to 200%, as Super Micro Computer reported sales of $3.85 billion in fiscal Q3 of 2024. Super Micro Computer is a high-flying tech stock in a rapidly expanding market with growing financials, making it a top investment choice in July 2024. What's the Target Price for Super Micro Computer Stock? Out of the 13 analysts covering SMCI stock, seven recommend "strong buy," five recommend "hold," and one recommends "strong sell," for a "moderate buy" consensus. The average target price for SMCI stock is $1,027.73, indicating an upside potential of 17.2% from current levels. Analysts tracking SMCI stock expect sales to rise from $7.12 billion in 2023 to $14.93 billion in 2024, with continued growth to $23.96 billion in 2025. Adjusted earnings are forecast to expand from $11.81 per share in 2023 to $23.86 in 2024, rising to $34 in 2025. Analysts expect SMCI stock to end 2028 with adjusted earnings of $150. So, if the stock is priced at 20x forward earnings, it should trade at $3,000 by July 2028. On the date of publication, Aditya Raghunath did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Nvidia Supplier Super Micro Computer Stock Is Down Wednesday, What's Going On? - Super Micro Computer (NASDAQ:SMCI)

Trump's comments on Taiwan Semiconductor spark concerns in the chip sector. Artificial server company Super Micro Computer, Inc SMCI shares are trading lower Wednesday following the US intensifying semiconductor sanctions against China and Presidential candidate Donald Trump's criticism of key contract chipmaker Taiwan Semiconductor Manufacturing Company TSM. The Biden administration is considering implementing the Foreign Direct Product Rule (FDPR), which permits controls on foreign-made products using even minimal amounts of American technology. Additionally, the US may impose further sanctions on specific Chinese chip companies. Furthermore, Trump's recent comments stirred concerns in the semiconductor sector. Trump suggested that Taiwan Semiconductor, a key supplier for Nvidia, should compensate the U.S. for its defense. Super Micro Computer is a crucial Nvidia supplier. In an interview with CNBC's Jim Cramer on Monday, CEO Charles Liang expressed optimism about the AI server company's growth trajectory, stating, "This AI revolution can be bigger even than the industrial revolution." Super Micro Computer stock has gained over 190% in the last 12 months. Investors can gain exposure to the stock through Vanguard Mid-Cap Growth ETF VOT and iShares Russell Mid-Cap ETF IWR. Price Action: SMCI shares were down 4.00% at $841.26 at the last check Wednesday. Now Read: Fed Rate Cut Expectations Drop Mortgage Rates To 4-Month Lows: Surge In New Applications, Refinance Demand Image: Shutterstock Market News and Data brought to you by Benzinga APIs

Stock-Split Watch: Is Super Micro Computer Next? | The Motley Fool

Supermicro's earnings are on tap, and all eyes are on its sky-high stock price... and liquid cooling. At the end of May, I noted five high-flying artificial intelligence stocks that seemed primed for a stock split. Sure enough, in a span of weeks, three of those five went ahead and announced splits. That of course leaves two others with sky-high stock prices and continued AI momentum. Here's why one of them, Super Micro Computer (SMCI -6.92%), may be the next to split. It wasn't long ago that Supermicro was a relatively unknown stock, with a market cap that relegated it to the small-cap Russell 2000 index. However, with a massive 246.2% gain in 2023 and then another 188.2% gain in the first half of 2024, Supermicro elbowed its way into the S&P 500 index in the first half, making it the biggest gainer in the index, even outpacing Nvidia. In July, the accolades kept rolling in, as it was just announced Supermicro will be admitted to the Nasdaq-100 index on July 22. After the tremendous run in the stock, Supermicro touched a high of $1,229 back in February, before pulling back to $879 per share as of this writing. Could a stock split be coming? While stock splits don't change the value of a company at all, they do usually mark a vote of confidence on the part of management. Supermicro's stock is definitely in the territory where other companies recently split their stock. But how does management plan to maintain and grow this valuation after its tremendous run? Obviously, Supermicro caught lightning in a bottle with AI, as its building-block server architecture, fast time to market, and power-efficient designs were perfectly suited for the AI era. As such, Supermicro has seen its revenues and earnings explode over the past two years, as it has grabbed far more share of the AI server market than it had of the traditional server market. But after the skyrocketing growth over the past two years, is there really opportunity for further growth? Supermicro now trades at 48.8 times trailing earnings and 24.8 times its 2025 earnings estimates. Supermicro has generally followed the trajectory of Nvidia, which at some level makes sense. After all, Supermicro's AI servers include Nvidia's chips, which it then marks up between 14% and 17% -- Supermicro's gross margin target -- for the value-add that Supermicro provides with its server architecture. So, one leg of growth will have to do with the AI accelerator market, which is mostly Nvidia but will also include Nvidia's competitors as they ramp their competitive offerings. While some have cautioned that AI investment may soon peter out, given the strength of the current boom, others are more optimistic. It's true that the most enthusiastic commentators are semiconductor executives perhaps "talking their book," such as Advanced Micro Devices CEO Lisa Su, who forecasts a $400 billion AI chip market by 2027 and Taiwan Semiconductor Manufacturing's management, which forecasts a 50% average growth rate for AI chips through that time. But these executives have a strong track record. Supermicro does seem confident in the market's growth. Not only will the company bring its Malaysia factory online very soon, but management just announced it would be building three new manufacturing facilities right in the heart of Silicon Valley, which will soon double the company's capacity for liquid-cooled "supercluster" capacity. One thing critics have pointed to as a limiting factor on AI growth is the tremendous amount of electricity required to power it all. To that end, Supermicro CEO Charles Liang thinks the near future of AI supercomputing will depend on liquid cooling technology. To date, liquid cooling has only garnered about 1% of the data center market, according to Liang. This has traditionally been due to the difficulty of managing liquid cooling systems in data centers, plus the extra cost. However, now that AI chips require so much electricity, and liquid-cooled racks greatly reduce the amount of heat generated and the need for large air conditioning systems, liquid cooling now makes much more sense. According to Liang, a liquid-cooled data center can cut operational expenses for AI data center operators by 40%. And Supermicro has been preparing for this moment, having invested in liquid-cooling technology over the recent past. Last quarter, the company's inventory greatly increased, which Liang noted was due to accumulating parts for a big liquid-cooled push in the back half of the year. As Supermicro is just on the cusp of bringing liquid-cooled racks to the server market, that should bode well for growth and margins. The more differentiated its offerings and the greater the operational costs it can cut for customers, the more it will be able to maintain margins on typically high-dollar but low-margin AI servers. Liang believes liquid-cooled racks will eventually grow from 1% of the data center market to 15% of the market in 2025 and 30% in 2026. If that's true and Supermicro continues its first-mover innovation, look for it to maintain or even grow its heady valuation. And if its stock price goes high enough, a stock split isn't out of the question.