Shares of Super Micro Computer (SMCI +3.18%) are up 17.5% this week, as of Thursday's close, according to data provided by S&P Global Market Intelligence. This follows encouraging macroeconomic developments and a positive analyst note for several industry peers.
NASDAQ: SMCI
Key Data Points
A rising AI tide lifts many boats
Super Micro Computer started the week strong, with a 5% pop on Monday. This was fueled by a combination of multiple reports suggesting Wall Street analysts expect the U.S. Federal Reserve to implement an extended policy of rate cuts for the next couple of years.
After raising rates at a historic pace to curb inflation for the better part of the last two years, U.S. central bank officials are widely expected to cut rates as many as six times next year alone -- likely in .25 percentage point increments. That's great for rate-sensitive growth stocks like Super Micro, which tend to look more attractive to investors relative to fixed-income alternatives as rates decline.
Super Micro extended its gains yesterday as Oppenheimer analyst Rick Schafer named multiple artificial-intelligence (AI)-related chip stocks "top picks" for 2024 including Nvidia, Marvell Technology, Broadcom, and Monolithic Power Systems. Investors tend to correlate such optimism for these companies with impending strong results from Super Micro Computer, which uses Nvidia chips in its GPU systems optimized for AI and machine learning.
What's next for Super Micro Computer investors?
Super Micro Computer handily beat Wall Street's expectations when it last released fiscal first-quarter results in November 2023. Judging by the timing of its previous reports, the company should be slated to update shareholders on its fiscal second quarter (ended Dec. 31, 2023) later this month.
For perspective, most analysts are modeling fiscal second-quarter sales of $2.78 billion (up from $1.80 billion a year earlier) and adjusted (non-GAAP) earnings of $4.52 per share. Both estimates are well within the company's own guidance for sales of $2.7 billion to $2.9 billion and adjusted earnings per share of $4.40 to $4.88.
Whether Super Micro Computer meets, exceeds, or falls short of those estimates might well determine the near-term direction of its share price. But in the meantime, investors are clearly excited for the company's growth prospects, and the stock is responding in kind.
