Super Micro Computer Stock Outlook: SMCI Is Still a Superstar to Buy


  • After last month’s sharp pullback, shares in Super Micro Computer (SMCI) have experienced a partial rebound.
  • While not certain, it’s possible that investors are realizing that future growth for the AI server company will remain impressive.
  • Still one of the most promising AI stocks out there, grab Super Micro Computer stock, while the rebound is still in the early stages.
Super Micro Computer stock - Super Micro Computer Stock Outlook: SMCI Is Still a Superstar to Buy

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Shares in Super Micro Computer (NASDAQ:SMCI) took a tumble in April, but more recently, they have experienced a partial rebound. Over the past month, Super Micro Computer stock has bounced back by around 30%.

Now encountering resistance at around $900 per share, the more skeptical may say recent price action has been little more than an example of a “dead cat bounce,” or a short-lived rally doomed to be followed up by another wave of price declines.

Of course, anything’s possible. However, we don’t expect a continued reversal for the AI server company’s shares. Disregard further weakness, considering recent developments and upcoming catalysts.

A full move back to prior price levels appears much more likely for SMCI. Here’s why.

Super Micro Computer Stock: Why it’s Bouncing Back

As discussed in prior Super Micro coverage, the aforementioned tanking for shares first took shape when the market read too much into the fact that the company did not release preliminary results ahead of earnings.

However, it wasn’t as if shares fell before earnings, before rallying upon the release of the results themselves.

Instead, after recovering somewhat from the pre-earnings pullback, Super Micro Computer stock sold off again after the April 30 earnings release. Mostly, due to investors focusing on the one major negative aspect to the latest results: a miss on revenue.

Nevertheless, since the earnings release, SMCI has moved back to higher prices. At present, it’s back to where it was just before the pre-earnings plunge.

So, what’s driving this rebound? While not certain, it may be the fact that recent developments signal that spending on AI infrastructure like servers and hardware isn’t slowing down.

Per a recent forecast from analysts at Bernstein, big tech capital expenditure could total $200 billion this year, with much of this figure going into the buildout of AI capability. With this, investors may be reassessing the situation with Super Micro, becoming less inclined to think the worst about future growth.

The Path Back to Four-Digit Prices

While still down from its high water mark, Super Micro Computer stock remains up by more than threefold from where it was at the start of 2024. Yet even with this big jump in price over a relatively short span of time, it’s not as if SMCI sports a nosebleed forward valuation.

At current prices, shares trade for around 38 times forward earnings. Not only is that a valuation in line with other high profile AI stocks.

It may even be a more-than reasonable valuation, given the prospect of further elevated revenue earnings growth, albeit at a slower pace than before.

That is, don’t expect further triple-digit year-over-year increases in Super Micro’s revenue and earnings, as seen in SMCI’s most recent quarterly results. However, based on sell-side forecasts for the coming fiscal year ending June 30, 2025, growth from here is nothing to sneeze at.

Consensus calls for revenue to grow by more than 58% in FY2025. Consensus also calls for earnings growth of 41.8%. Even if the company just meets these forecasts, and SMCI experiences some multiple compression, this may prove sufficient to drive shares back to prices well north of $1000 per share.

Bottom Line: The Comeback is Just Getting Started

As has been the case since last month, investors remain somewhat doubtful about Super Micro Computer’s future growth potential. However, not only does the latest on AI hardware demand bolster the argument that elevated growth will persist.

It’s very possible that consensus for the next fiscal year is conservative. For instance, Super’s competitive advantages, like its strong relationship with leading chip designers, could help it gain further share in a fast-growing market.

Beyond the potential for further super star growth, something else could provide shares a lift. Possible changes in monetary policy later this year could be a boon for growth stocks. If this happens, SMCI could re-rate to the upside.

With a Super Micro Computer stock comeback still in the early stages, it’s still prime time to add this AI winner to your portfolio.

Super Micro Computer stock earns an A rating in Portfolio Grader.

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.

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