Why Super Micro Computer Stock Skyrocketed to New Highs This Week

Week so far shares of Super microcomputer (NASDAQ: SMCI) rose 23% through Thursday’s market close, according to data provided by S&P global market information. The demand for artificial intelligence (AI)-driven computing is accelerating revenue growth and profits for this leading provider of rack-scale data center solutions.

Despite the stock’s massive run over the past year, the company is seeing market share gains for its products and full-year revenue expectations have been raised.

Why Super Micro Computer’s revenue rose more than 100% in its fiscal second quarter

In the company’s 2023 annual financial report, CEO Charles Liang said the continued growth of AI computing could potentially have a bigger impact on the world than the Industrial Revolution of more than 200 years ago. His business is definitely growing that way. Earlier this week, Super Micro reported record revenue of $3.66 billion for its second fiscal quarter ended December 31, a year-over-year increase of 103%.

The company continues to benefit from demand Nvidia‘S graphics processing units (GPUs)so as these chips become more available, it will drive more sales of Super Micro’s rack systems for AI.

Management expects revenue to double to between $14.3 billion and $14.7 billion in fiscal 2024. “With AI applications booming, I expect the $20 billion annual revenue target is only a few years away,” Liang said in his annual letter to shareholders last year.

Why stocks have room to run

Despite the stock being up 700% in the last twelve months, the stock is still reasonably priced. It reported adjusted earnings per share of $5.59, compared with $3.26 in the same quarter last year. That’s an annual run rate of $22.36, which…

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