Super Micro Computer's (SMCI -1.83%) share price slipped in Wednesday's trading. The artificial intelligence (AI) stock ended the daily session down 4.1%, according to data from S&P Global Market Intelligence.
Top AI stocks lost ground in today's trading, and Supermicro got caught up in the pullback. Recent filings published through the Securities and Exchange Commission (SEC) showed that members of Nvidia's board of directors had recently sold roughly $80 million worth of company stock.
In addition to news that Nvidia insiders had recently unloaded shares, an analyst's recent coverage of SoundHound AI stock likely impacted Supermicro's share price today. Citing valuation concerns, a Northland analyst lowered the firm's rating on SoundHound from outperform to market perform in a note published today. As a result of these catalysts, investors became more cautious about Super Micro Computer Stock today.
Can Super Micro Computer stock still deliver huge gains?
Nvidia, SoundHound AI, and Super Micro Computer have emerged as some of the market's most visible and most explosive artificial intelligence stocks. When major players in the space see significant valuation pullbacks, it tends to have ripple effects for other companies in the otherwise red-hot tech category.
Even with today's pullback, Supermicro stock has seen incredible gains in conjunction with rising demand for its rack-server technologies. The company's share price is still up 187% year to date, despite today's sell-off.
Demand for Super Micro Computer's server and storage solutions has skyrocketed as leading tech companies have made moves to ramp up their AI processing and data transmission capabilities. It looks like these performance catalysts will continue to be quite strong in the near term.
For Supermicro's current fiscal year, which ends June 30, the company's midpoint guidance calls for sales of roughly $14.5 billion. If performance were to come in at that level, revenue would more than double, compared to the $7.12 billion in sales the business posted in its last fiscal year.
SMCI PE Ratio (Forward) data by YCharts.
With Supermicro stock trading at roughly 37.7 times this year's expected earnings and roughly 27.5 times next year's expected profits, the company has a growth-dependent valuation, even on the heels of today's valuation pullback. On the other hand, recent momentum for the business has been nothing short of incredible.
There are good reasons to think that growth will continue at very high rates over the next few years and beyond. Supermicro isn't a low-risk stock, but there are signs that it could surge above current pricing levels.
