2024-04-03 06:30:19 ET
Shares of Super Micro Computer Inc (NASDAQ: SMCI) have offered exceptional returns over the past couple of years on the back of continued focus on artificial intelligence.
In fact, if you had invested just $1,000 in before the pandemic when it was priced at just $27 – you would have made close to $37,000 on that investment by now.
That’s a whopping 37-fold return in less than five years. But is it too late to invest in Super Micro stock now? Let’s explore.
Is there potential for upside in ?
As mentioned above, the ongoing rally in Super Micro Computer Inc has been largely related to AI – and that’s one innovation that many believe is not in a bubble and will continue to be a material tailwind moving forward.
is seeing massive demand for its customizable servers as the world continues to tap on artificial intelligence for everything from drug discovery to engineering simulations.
The Nasdaq-listed firm is super bullish on its future prospects and forecasts its annual sales to soon hit $25 billion. That suggests a huge room for growth from about $14.5 billion it expects to bring in this year.
In January, Super Micro said its net sales roughly doubled year-on-year to $3.66 billion in its fiscal Q2.
Is Super Micro stock worth buy today?
Evidently, there’s sufficient room for the information technology giant to extend its rally in the coming months.
But valuation is a part of Super Micro shares that warrants thinking twice at least before investing in it. They’re currently trading at about 37 times forward earnings versus 39 times for Nvidia Corp.
At roughly the same valuation, I’d rather pick for investment for two primary reasons.
- Nvidia has a much better margin profile than
- Supermicro is dependent on for GPUs
Note that Sherman Tuan – an independent director of Super Micro Computer Inc sold over $4.0 million worth of in March as Invezz reported here .
So, even higher ups within the company itself have started taking profits because explosive returns may be a bit harder to materialise in Supermicro moving forward.
All in all, while Super Micro shares are super strong and have potential to climb further, I’d much rather bet on Nvidia than at current valuations.
The post If you invested $1,000 in Super Micro stock in 2020, it would be $38,000 by now appeared first on Invezz