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This might be a hidden gem among semiconductor stocks

This might be a hidden gem among semiconductor stocks
Elmaz Sabovic

With the previous year being pivotal for AI, it is no wonder that companies that focus their products in this industry are recording impressive gains. Among them is Super Micro Computer (NASDAQ: SMCI), whose performance made its executives readjust their revenue expectations.

On December 19, the management of SMCI revised their expectations for the quarter ending in December. Consequently, SMCI stock experienced a significant surge, propelled by the announcement and the underlying credibility of multiple growing ecosystems.

The enterprise, headquartered in San Jose, California, anticipates net sales of $3.6 billion to $3.65 billion for its second quarter of fiscal year 2024. This is a notable revision from the previous management guidance, which had indicated a range between $2.7 billion and $2.9 billion, as reported on January 19.

Exactly how good of performance did SMCI have?

Super Micro Computer has witnessed a remarkable 60% year-to-date surge, contributing to an increase of approximately $12 billion in market capitalization within just three weeks. 

This notable uptrend follows the company’s upward revision of its revenue forecast for the quarter ending December 31, now anticipated to reach $3.6 billion. Should the company report with these projections, it would signify a year-over-year doubling of revenue, per an X post from stock reporter The Kobeissi Letter on January 22.

“If the company reports as guided, their revenue will double year-over-year. AI-based server demand is the primary reason for the surge in revenue.”

SMCI stock YTD increase chart. Source: The Kobeissi Letter
SMCI stock YTD increase chart. Source: The Kobeissi Letter

The substantial increase in revenue is attributed primarily to the heightened demand for AI-based servers. Consequently, the stock has demonstrated an impressive growth trajectory, experiencing a remarkable 500% increase over the past year.

SMCI stock price analysis

At the time of press, SMCI stock was trading at $436.24, notching an increase of 3.04% since the previous closure and adding a remarkable 27.93% to its value over the past five trading sessions. Since the year commenced, this stock has surged by over 50%.

SMCI 5-day stock price chart. Source: Google Finance
SMCI 5-day stock price chart. Source: Google Finance

The technical indicators for this stock are pretty bullish, with an agreement of ‘strong buy’ at 16, and moving averages agree to a ‘strong buy’ suggestion at 14. Oscillators recommend a ‘buy’ at 2.

Technical analysis of SMCI stock. Source: TradingView
Technical analysis of SMCI stock. Source: TradingView

With solid numbers marking the previous year, 2024 started great for this stock. Will this trend and hype last and drive this stock even further remains to be seen.

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