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Updates SMCI shares to close
Super Micro Computer’s (NASDAQ:SMCI) intraday performance on Friday marked its worst day in over six months, portraying a dramatic and unexpected turn of events following a remarkable rally.
Earlier this year, the stock surged as investors reacted to the company’s preliminary FQ2 2024 results, hitting an all-time high on Thursday at $1,006.35 – a staggering 223.1% gain from its closing price of $311.44 on January 18.
Despite the meteoric rise, SMCI stock shed 20.1% on Friday, closing at $802.70, leaving many perplexed by the sudden change of fortune.
Based in San Jose, California, Super Micro (SMCI) is a manufacturer of rackmount servers, graphics processing unit (GPU) servers, motherboards and chassis, as well as ethernet switches and adapters.
The primary catalyst for SMCI’s surge was its potential in the artificial intelligence (AI) server market, with strong customer demand for its AI servers prompting the company to revise its FQ2 sales and profit guidance in the January 18 preliminary results announcement.
In its subsequent earnings report on January 29, Super Micro (SMCI) exceeded the preliminary numbers and offered significantly higher current quarter revenue guidance. The stock reached record highs after both the preliminary announcement and the final results, drawing commendation from analysts.
On Friday, Wells Fargo initiated coverage of the stock with an Equal Weight rating and a price target of $960.
“SMCI’s AI-fueled fundamental momentum, underpinned by engineering-first differentiation, has been nothing less than remarkable and should support some sustainable valuation re-rate,” said Wells Fargo analyst Aaron Rakers. “We are positive on Super Micro’s (SMCI) ability to continue to be a meaningful player in the ongoing AI server investment cycle.”
“However, we think that investor sentiment is already discounting a path to $30B of revenue and $45+ of EPS. We remain cautious on increased competition in the AI server market from traditional vendors and (original design manufacturers) as well as from SMCI concentration risk in AI shipments with ~5-7% of unit shipments accounting for ~60% of revenue,” Rakers added.
Wall Street analysts and SA Authors regard Super Micro (SMCI) stock as a Buy. Seeking Alpha’s Quant rating on the stock is Strong Buy.