- Super Micro Computer couldn’t have picked a worse day to report its earnings on Monday as fears of an economic recession mount.
- SMCI stock has taken investors on a wild ride this summer, sinking 25% in the past several weeks.
- Super Micro Computer’s management team is optimistic about upcoming results after a record performance in fiscal Q3. A strategic partnership with AI leader Nvidia could go a long way.
- If you’re looking for some stocks with huge potential that could be fantastic “buy the dip” opportunities, make sure to grab a free copy of our brand-new “The Next NVIDIA” report. It features SMCI and two other stocks we’re confident has 10X potential.
Super Micro Computer (Nasdaq: SMCI), a server and storage systems company, has chosen a difficult backdrop in which to report its fiscal Q4 and 2024 financial results on Aug. 6 as headlines of a U.S. economic recession swirl. Stocks are reeling, with all three of the major indices currently trading in the red with drops of roughly 2% each. Super Micro will likely need to have overwhelmingly strong results to please this market, especially on the heels of the SMCI stock’s 7% drop on Friday.
Super Micro’s stock, which recently joined the Nasdaq 100 index, replacing Walgreens Boots Alliance (Nasdaq: WBA), has taken it on the chin this summer, shaving off 25% of its value over the past month. However, year-to-date, the stock is up an impressive 121% as investors have flocked to this AI data center play. With the company set to release earnings on Monday, here’s a preview of what investors can expect.
Management Outlook
One way to know what to expect from Super Micro is to consider management’s outlook in Q3. At that time, the company had the AI-solution winds at its sails with a record-breaking performance. In response, Super Micro raised the high end of its fiscal 2024 revenue guidance from $14.7 billion to $15.1 billion. Super Micro also established guidance for GAAP net income per diluted share of $21.61-$22.46 and non-GAAP of $23.29 to $24.09 per share. Super Micro’s stock proved to be extremely volatile around the time of its fiscal Q3 results, trading in a range of $700 and $910 in the span of two days.
Nvidia Effect
As an AI stock, Super Micro has formed some key partnerships, chief among which is its collaboration with industry leader Nvidia (Nasdaq: NVDA). While the two tech companies have been linked together for several decades, their partnership has been flourishing amid the AI mania.
Super Micro CEO Charles Liang reportedly stated, “Whatever Nvidia develops, we pretty much sync up with them. And that’s another reason why, whenever they have a new product out, we have a new product available quicker than our competitors do.”
KKM Financial CEO Jeff Killburg refers to Super Micro as a “baby Nvidia” stock, recently suggesting that it could be time for investors to take some profits off the table following SMCI’s parabolic move. However, he also warned about betting against Super Micro, suggesting that would be a terrible idea.
Is Super Micro a Buy in 2024?
One thing that is for certain is that Super Micro’s stock is likely to remain volatile for the foreseeable future. If your risk tolerance allows for wild market swings, and you are looking to gain exposure to data centers, AI and the cloud, Super Micro it could be worth considering the addition of SMCI to your portfolio in 2024. Wall Street analysts are bullish on the stock, as evidenced by an average price target of $978, reflecting close to 60% upside potential.
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