With earnings season in full swing, soon the market will direct its attention to Super Micro Computer (NASDAQ:SMCI). Although Super Micro Computer stock might wobble in the next few weeks, we’re assigning it an “A” grade and proposing a pre- and post-earnings strategy.
Super Micro Computer designs artificial intelligence enabled servers. That’s a great business to be in, due to the intense demand for AI hardware.
There’s no need to panic-sell your Super Micro Computer shares even if the company is about to face a major test. If you envision continued growth for Super Micro Computer, it’s entirely possible to stay invested while also hedging your bets.
The AI Boom Is ‘Just Beginning’
In an interview with Yahoo! Finance, Super Micro Computer CEO Charles Liang concisely summed up the best reason to own Super Micro Computer stock. He explained that Super Micro Computer has more room to expand “because the AI boom is just beginning.”
This argument makes sense. Unless you really think that the AI trend will come to a screeching halt, you can remain confident that Super Micro Computer will continue to generate robust revenue.
Liang also called Super Micro Computer’s inclusion in the prestigious Nasdaq 100 index a “great honor.” Certainly, this inclusion is a sign that Super Micro Computer is a top-tier tech company.
Furthermore, according to Yahoo! Finance, Liang said Super Micro Computer is “accelerating its production capacity and it has just added four new facilities in Silicon Valley” to meet the high demand for AI hardware.
These are signs of a successful, thriving business in expansion mode. Thus, for the foreseeable future, there’s no reason for investors to worry about Super Micro Computer’s financial and operational health.
A Policy of ‘Prohibition’?
Here’s a date that you’ll definitely want to mark on your calendar. Super Micro Computer Super will release its fourth-quarter fiscal 2024 results on Aug. 6.
The analysts’ consensus estimate calls for Super Micro Computer to have earned $8.10 per share. Remember, Super Micro Computer has a good track record of beating analysts’ quarterly EPS estimates.
One analyst/commentator seems to recommend a cautious investment approach, however. Paul Meeks of Harvest Portfolio Management is “pretty comfortable with the continued AI infrastructure building names.” Yet, he is concerned that share prices could still decline.
“So what I am doing is I have a prohibition on buying [tech stocks] at least till we get through next week’s reports,” Meeks stated. Note that Meeks isn’t telling people to panic-sell technology stocks because earnings reports are imminent.
You don’t have to “prohibit” yourself from buying Super Micro Computer stock just because an earnings event is coming up. It’s fine if you want to just buy a small number of shares, and then consider your next move after Super Micro Computer releases its quarterly data.
Super Micro Computer Stock: Don’t Prohibit Yourself From Profiting
Meeks specifically highlighted Super Micro Computer as an AI infrastructure play. We don’t blame him, as Super Micro Computer is clearly in growth mode.
Maybe you’re worried about the Super Micro Computer share price falling after the upcoming earnings event. If so, then it’s possible to buy a small number of shares and/or hold the shares you already own. Then, you can reassess your strategy after the earnings release, as you’ll have more information to work with.
With that cautious but confident approach in mind, we’re giving Super Micro Computer stock an “A” grade. So, be sure to put Aug. 6 on your calendar and get ready for all possible outcomes.
On the date of publication, Louis Navellier had a long position in SMCI. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
On the date of publication, the responsible editor did not have (either directly or indirectly) and positions in the securities mentioned in this article.
