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Super Micro Computer (SMCI) shares are flashing a key technical signal that could spell further upside ahead of the company’s crucial Feb. 25 filing deadline. The server maker’s stock more than doubled in February, putting it on track for its strongest monthly performance in nine months. The remarkable rally temporarily pushed its relative strength index (RSI) above 80, which is typically seen as an “overbought” indication.
However, analysts note this elevated RSI level has historically been more of a strength indicator than a warning sign for SMCI. According to a MarketWatch report, the last time SMCI’s RSI topped 80 in January 2024, shares climbed another 119.5% over the following 17 trading sessions.
The surge comes as investors await Super Micro’s regulatory filing deadline on Feb. 25, with growing optimism around the company’s potential to secure major AI server contracts.
Is SMCI a Good Stock to Own Right Now?
In the fourth quarter of its fiscal 2024 (which ended June 30, 2024), Super Micro Computer reported revenue of $5.3 billion, a staggering 143% increase year-over-year, as demand for AI server infrastructure continued to surge.
Super Micro, which has become a key player in the artificial intelligence hardware boom, forecasts even stronger growth ahead. It projects fiscal first-quarter revenue between $6 billion and $7 billion, potentially more than tripling its revenue compared to the same period last year.
Super Micro is a liquid-cooled AI server technology pioneer, recently launching 8U AI NVIDIA H100 Liquid-Cooled Clusters. However, the rapid scaling of operations has put pressure on margins. Its non-GAAP gross margin declined to 11.3% in Q4 2024 from 15.6% in the previous quarter, attributed to customer mix and initial production costs for its new liquid cooling technology.
Super Micro is aggressively expanding its manufacturing capacity to meet demand. It currently produces 5,000 server racks per month, including 2,000 with advanced liquid cooling capabilities. Moreover, the company is scaling operations across San Jose, Taiwan, and Malaysia.
Looking ahead, Super Micro provided full-year guidance for revenue between $23.5 million and $25 million. Further, it expects 25%-30% of global new data center deployments to use its liquid cooling solutions in the next 12 months.
What Is the Target Price for Super Micro Computer Stock?
Super Micro’s shares have surged this year as investors bet on its position as a key infrastructure provider for the AI computing boom, though margins will be closely watched as Super Micro balances growth with profitability.
Analysts tracking the tech stock expect SMCI’s revenue to increase from $14.94 billion in fiscal 2024 to $33.5 billion in fiscal 2026. Comparatively, adjusted earnings per share are forecast to expand from $2.21 in 2024 to $3.65 in 2026.
Out of the 13 analysts covering Super Micro Computer stock, two recommend “Strong Buy,” two recommend “Moderate Buy,” seven recommend “Hold,” and two recommend “Strong Sell.” The average target price for SMCI stock is $52.68, below the current trading price.
