2024-01-31 06:17:48 ET
It’s 2024, and history seems to be repeating itself for some of the hot stocks of last year. I am talking of AI stocks, which, despite having a robust 2023, are again showing their potential this year. One stock that has surprised the stock markets is Super Micro Computer Inc. (NASDAQ:SMCI).
The stock is up 80% YTD despite returning a whopping 609% in the last twelve months. With this return, Super Micro Computer has outperformed AI leader NVIDIA, which has gained by 221%. The two stocks are incomparable when it comes to market value. Super Micro Computer has a market value of $28.49(£22.5) billion, compared to NVIDIA’s $1.55(£1.22) trillion. Super Micro Computer is also the most returning AI stock in the past year. But what has made the stock such a darling to investors?
AI stocks are generally hot prospects right now. So, the Super Micro Computer is finding itself at the right place and at the right time. The company sells AI-enabled high-performance servers where enterprises and data centres are its main clients. With generative AI technologies growing popular in the past year, Super Micro Computer has benefited.
Results are backing Super Micro Computer’s booming business. On Monday, the company reported its Q2 2024 results that blew away Wall Street. The company reported that its revenue doubled from the prior year to reach $3.66(£2.89) billion. The revenue was higher than estimates of $3.06(£2.4) billion.
As 2024 unfolds, Super Micro Computer projects further goodies even as its AI business takes shape. The company expects a FY24 revenue of $14.3(£11.3) billion, well above $11.5(£9) billion estimates. Having set the tone already, the stock could be geared for another winning year.
SMCI corrects slightly after hitting a record price
Technically, Super Micro Computer stock is correcting after hitting a new high above $550. The stock is clearly overbought, with an RSI reading of 81. However, the stock’s near-parabolic movement, coupled with the quarter results, suggests a bullish momentum.
Should you buy Super Micro Computer stock?
Investing in Super Micro Computer is surely going to pay off as the AI sector continues to shake the market. According to Susquehanna analyst Mehdi Hosseini, AI is still in the early stages of adoption.
Nonetheless, it is doubtful if SMCI is an appropriate buy at the current price. The stock could correct before continuing with the uptrend. Short-term retreats will open up attractive entries for buyers.
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