SMCI Stock Alert: Super Micro Computer Surges Higher in AI Frenzy


  • Super Micro Computer (SMCI) jumped in early market trading, helped by Nvidia’s (NVDA) earnings.
  • The server assembly company uses liquid cooling to help customers use the fastest chips.
  • Bulls see it rising to $1,300. Bears call it overvalued.
SMCI stock - SMCI Stock Alert: Super Micro Computer Surges Higher in AI Frenzy

Source: rafapress /

Super Micro Computer (NASDAQ:SMCI) stock rose almost 12% overnight as excitement over the Nvidia (NASDAQ:NVDA) earnings spilled over into the server assembly company.

Super Micro has been among the hottest stocks of 2024, up 190% just since the start of the year. This includes a hard fall going into the Nvidia earnings release. But it’s getting most of that loss back today, rising to $850 per share after the market opened, a market capitalization of nearly $48 billion.

The company is taking advantage of its gains, announcing a convertible debt offering of $1.5 billion yesterday.

What Makes You Super?

What makes SMCI super is its liquid cooling technology, which lets the servers it assembles use the fastest chips. As chip densities increase, they give off more heat while operating. Dissipating that heat is key to maintaining operations. SMCI says its technology can cut a data center’s energy use by 40% and runs quieter, too.

SMCI stock is also volatile because there’s so little of it, with fewer than 56 million shares by last count. Analysts have worried about its rising valuation, with estimated fiscal 2024 revenue of $9.2 billion and profitability of less than 10%.

But momentum investors aren’t worried. They have been partying like it’s 2021. Never mind the nosebleed valuation, up to 70 times earnings.

Rosenblatt Securities analyst Hans Mosesmann is cheering on the bulls, believing the stock could hit $1,300. It’s doing a lot of its manufacturing in the U.S., which is where most customers are, he noted. It’s gaining share within its niche.

If you want to worry about SMCI, look to its poor cash flow performance, necessitating the latest debt offering. Also, consider that there’s competition from the likes of HP Enterprise (NYSE:HPE), IBM (NYSE:IBM), Dell (NASDAQ:DELL), and a host of start-ups.

SMCI Stock: What Happens Next?

Expect Super Micro’s wild ride to continue until data centers see demand slow down. A small float, when compared with rivals, helps small investors a lot. Conservative investors might want to look at its convertible bonds.

As of this writing, Dana Blankenhorn had a LONG position in NVDA. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, available at the Amazon Kindle store. Tweet him at @danablankenhorn, connect with him on Mastodon or subscribe to his Substack.

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