Super Micro Computer (NASDAQ: SMCI), a key player in high-performance computing and AI infrastructure, has experienced significant market fluctuations this year.
The stock surged sharply in January 2024, primarily due to its inclusion in the S&P 500. However, this upward momentum was followed by a substantial correction, exacerbated by a notable drop in gross margins to 11.2% in quarter four (Q4 FY2024), down from 17% the previous year.
Despite these challenges, analysts are increasingly optimistic about SMCI’s future, with some predicting that the stock is on the brink of a major rally.
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Notably, trading expert TradingShot has identified SMCI as being in a strong position for significant upward movement following a period of consolidation. The analyst has set a bullish price target of $2,000, which could mark the beginning of the next major rally.
This optimistic forecast is supported by technical indicators that suggest the stock is bottoming out after retracing from its earlier highs, signaling a resilient uptrend.
Current stock performance and signs of recovery
Currently trading at $628.80, SMCI is demonstrating a robust recovery. The stock has marked its strongest one-week green candle since May 22, 2023, a positive indicator following a brief dip below the 50-week moving average (1-week MA50, blue trend-line).
This dip was largely driven by market concerns over a potential economic slowdown. However, SMCI’s rebound within the critical two-year ‘higher lows zone’, which began in July 2022, shows the stock’s resilience and long-term bullish potential.
Technical analysis and key levels to watch
According to the analysis, the 100-week moving average (1-week MA100, green trend-line), located at the bottom of the ‘higher lows zone’, has consistently served as a critical support level during this recovery.
As long as SMCI remains above this level, the long-term bullish outlook is likely to remain intact. The recently reclaimed 1-week MA50 now acts as immediate support, providing a solid base for further upward movement around the $470 mark. This level represents a crucial support zone where the stock has historically attracted buying interest.
On the resistance front, the $950 to $1,000 zone is crucial. This range represents the previous high before the recent consolidation and serves as the first major barrier SMCI must surpass.
A breakout above this level would likely confirm the start of a new bullish phase, potentially driving the stock toward the long-term target of $2,000. Additionally, the previous high at $949.04 is another key resistance point that, if breached, could signal the continuation of the uptrend.
Several technical indicators also reinforce the bullish outlook for SMCI. The Relative Strength Index (RSI) briefly dipped below its two-year support zone but has since recovered, indicating that the stock is not oversold and has room for further gains.
Moreover, the green ‘Channel Up’ pattern on the chart suggests that SMCI is poised to embark on another bullish leg, potentially replicating or exceeding previous rallies of 156.78%, 288.39%, and 344.40%.
Furthermore, the recent surge in trading volume during the rebound reflects increased buying interest, a crucial signal that bullish momentum is building.
SMCI stock price analysis
By the close of markets on August 16, SMCI ended the day with a 24-hour gain of 0.34%, trading at $628.50.
In conclusion, SMCI’s technical setup points to a strong possibility of a new bullish phase. Investors should keep a close eye on the key support levels, as maintaining above these levels is essential for preserving the bullish scenario.
Conversely, a successful breakout above the $950 to $1,000 resistance zone would likely signal the start of a significant rally, with the next target set at $2,000.
As long as the stock continues to respect these key levels and maintain its upward momentum, SMCI presents a compelling opportunity for investors and traders looking to capitalize on its growth potential.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
