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Super Micro Computer's (SMCI) Meteoric Rise Continues
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There aren’t too many stocks that have had a more blockbuster start to 2024 than Super Micro Computer, Inc. (SMCI - Free Report) . This manufacturer of high-performance storage solutions in the modular and open architecture domain has seen its share price skyrocket 139.8% year to date as of Feb 6. If one goes further back, they will find it has grown a whopping 730.2% since the beginning of 2023.
The California-based company currently has a market cap of around $37 billion, approximately eight times its size at the end of 2022. While the success story borne out of the artificial intelligence (AI) boom of 2023 clearly has been the thousand-tonne gorilla NVIDIA Corporation (NVDA - Free Report) , SMCI has been a major mid-cap winner.
SMCI’s servers have been in heavy demand. These are the hardwares that are used to run, connect and cool down AI chips, which can be in thousands. The company is making good of the overall AI optimism in the markets, and its business is intrinsically linked with how chipmakers are doing overall. For example, the company continues to benefit from the demand for graphics processing units manufactured by Nvidia and Advanced Micro Devices, Inc. (AMD - Free Report) .
With these chips coming into better supply, the sales numbers of SMCI's rack systems for AI are skyrocketing. Nvidia and Advanced Micro Devices carry a Zacks Rank #2 (Buy) and #4 (Sell), respectively. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
After the bell on Jan 29, Super Micro Computer, which currently sports a Zacks Rank #1 and belongs to the Computer - Storage Devices subindustry, reported second-quarter fiscal 2024 earnings of $5.59 per share, beating the Zacks Consensus Estimate of $5.48. This resulted in a 2% earnings surprise. Also, it reported revenues of $3.7 billion for the quarter, beating the Zacks Consensus Estimate of $3.2 billion by 14%. Subsequently, it heavily revised its revenue outlook for the year and became a catalyst for an end-January AI rally.
The Zacks Consensus Estimate for its current-year earnings has improved 28.6% over the past 60 days, and its expected earnings growth rate for the current year is 83.7%.
Bottom Line
While a mid-cap AI player like Super Micro Computer has witnessed a surge since the onset of 2023, investors should still take a prudent approach while making an investment call on it. Over the years, when an economy traverses troubled waters, investors have been seen to display irrational behavior. It is the meteoric rise that investors must cautiously approach and base their decisions on financial health and fundamentals.
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Super Micro Computer's (SMCI) Meteoric Rise Continues
There aren’t too many stocks that have had a more blockbuster start to 2024 than Super Micro Computer, Inc. (SMCI - Free Report) . This manufacturer of high-performance storage solutions in the modular and open architecture domain has seen its share price skyrocket 139.8% year to date as of Feb 6. If one goes further back, they will find it has grown a whopping 730.2% since the beginning of 2023.
The California-based company currently has a market cap of around $37 billion, approximately eight times its size at the end of 2022. While the success story borne out of the artificial intelligence (AI) boom of 2023 clearly has been the thousand-tonne gorilla NVIDIA Corporation (NVDA - Free Report) , SMCI has been a major mid-cap winner.
SMCI’s servers have been in heavy demand. These are the hardwares that are used to run, connect and cool down AI chips, which can be in thousands. The company is making good of the overall AI optimism in the markets, and its business is intrinsically linked with how chipmakers are doing overall. For example, the company continues to benefit from the demand for graphics processing units manufactured by Nvidia and Advanced Micro Devices, Inc. (AMD - Free Report) .
With these chips coming into better supply, the sales numbers of SMCI's rack systems for AI are skyrocketing. Nvidia and Advanced Micro Devices carry a Zacks Rank #2 (Buy) and #4 (Sell), respectively. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
After the bell on Jan 29, Super Micro Computer, which currently sports a Zacks Rank #1 and belongs to the Computer - Storage Devices subindustry, reported second-quarter fiscal 2024 earnings of $5.59 per share, beating the Zacks Consensus Estimate of $5.48. This resulted in a 2% earnings surprise. Also, it reported revenues of $3.7 billion for the quarter, beating the Zacks Consensus Estimate of $3.2 billion by 14%. Subsequently, it heavily revised its revenue outlook for the year and became a catalyst for an end-January AI rally.
The Zacks Consensus Estimate for its current-year earnings has improved 28.6% over the past 60 days, and its expected earnings growth rate for the current year is 83.7%.
Bottom Line
While a mid-cap AI player like Super Micro Computer has witnessed a surge since the onset of 2023, investors should still take a prudent approach while making an investment call on it. Over the years, when an economy traverses troubled waters, investors have been seen to display irrational behavior. It is the meteoric rise that investors must cautiously approach and base their decisions on financial health and fundamentals.