2024-06-20 12:51:17 ET
Summary
- SMCI has been a clear winner in the market's ongoing AI rally, despite recently paring some of its gains on mixed earnings results.
- Yet the stock has been showing signs of a sustained recovery in recent weeks, underpinned by a successful Computex keynote that shows SMCI's mission-critical role in AI developments remains intact.
- SMCI also benefits from tangible fundamental tailwinds ahead, with improving supplies, additive growth from its first mover advantage in the provision of DLC solutions at scale, and increasing operating leverage.
- Trading at 2.5x estimated sales and 28.5x estimated earnings, SMCI's fundamental strength and emerging DLC advantage remains underappreciated, with potential for further upside.
Since recognizing Super Micro Computer ( SMCI ) as a potentially overlooked AI winner during our initiating coverage in mid-2023, the stock has surged more than 400% before giving back some of its gains in recent months. Admittedly, it has been a volatile couple of months for the SMCI stock since its S&P 500 admission and mixed F3Q24 earnings update. But it has finally started to show some signs of a sustained recovery in recent weeks. Building on our previous coverage on SMCI, which focused on the stock’s valuation considerations on the eve of its S&P 500 admission, the following analysis will dive further into why we believe the recent rally still has legs....
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Here's Why We Think Super Micro Computer Will Hit Another All-Time High