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Headquartered in San Jose, California, Super Micro Computer, Inc. (SMCI) is a prominent provider of energy-efficient server and storage solutions, leveraging modular and open architecture. Valued at a market cap of $28.5 billion, the company serves global markets in enterprise data centers, cloud computing, AI, and 5G/edge computing.
Shares of the server specialist have substantially outpaced the broader market over the past 52 weeks. SMCI has surged 46.8% during this period, compared to the S&P 500 Index ($SPX), which has rallied 18.2%. In 2024, SMCI's performance has been even more impressive, with a 79.4% gain, far exceeding the S&P 500's 11.5% gains on a YTD basis.
Zooming in further, SMCI has also outpaced the Technology Select Sector SPDR Fund’s (XLK) 20.2% gains over the past 52 weeks and 6.4% return in 2024.
Super Micro Computer’s outperformance compared to the broader market could be attributed to its strong fundamentals and strategic focus on the AI boom. The company has become a Wall Street favorite by acting as a key link between AI chipmakers and data centers. Its partnership with NVIDIA Corporation (NVDA) provided early access to high-end GPUs while expanding deals with other leading chip companies, which has further boosted its market position.
However, on Aug. 7, Super Micro Computer shares fell over 20% after the company reported Q4 earnings, which failed to surpass the Street’s earnings expectations. On a positive note, the company reported an impressive 143% annual increase in the top line to $5.31 billion, beating the consensus estimate of $5.29 billion.
For the current fiscal year, ending in June, analysts expect Super Micro's EPS to grow by 45.9% annually to $29.32. The company's earnings surprise history is mixed. It exceeded the consensus forecast in two of the past four quarters while falling short on the other two occasions.
Among the 13 analysts covering the stock, the consensus rating is a “Moderate Buy.” That’s based on six “Strong Buy” ratings, six “Holds,” and one “Strong Sell.”
This configuration is slightly less bullish than a month before, with eight analysts suggesting a "Strong Buy."
Several brokerage firms expressed dissatisfaction with the server maker’s Q4 earnings report. On Aug. 7, Bank of America Corporation (BAC) downgraded Super Micro Computer from a "Buy" to a "Neutral" rating and lowered its target price from $1,090 to $700.
The mean price target of $1,010.91 represents a remarkable premium of 98.2% from SMCI's current price levels. The Street-high price target of $1,500 implies that the stock could rally as much as 194.2%.
On the date of publication, Kritika Sarmah 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.
