- Super Micro Computer experienced significant growth in Q2’24, playing a central role in the transition to higher capacity computing in the GenAI renaissance.
- JPMorgan analyst predicts substantial growth in the broader hardware market as AI takes form, presenting an opportunity for SMCI’s advanced compute systems.
- SMCI has plans to expand its production capacity and facilities, aiming to reach a $25 billion annual revenue target and drive significant revenue growth.
The first question that comes to mind after this huge run-up in share price is whether Super Micro Computer (NASDAQ:SMCI) still has gas in the tank to continue appreciating in value. Since January 2023, the stock has returned 2.23x before pulling back -20% on February 16, 2024. A -20% pull on share price should raise an alarm bell for any prudent investor; however, looking at the recently filed Form 4, it appears that Don Clegg, SVP of Sales sold a large block going into the end of the week. The real question to ask is whether this sell-off was the beginning of a new trend and whether this large block sold by an insider is a signal to the market for imminent events to come. Despite this pullback in the share price, I believe that SMCI has a significant upside potential given management’s ambitious growth strategy. I provide SMCI shares a BUY recommendation with a price target of $1,700/share based on 5x eFY25 sales.
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