Shares of Super Micro Computer (SMCI 3.91%) were climbing again last month as the company, best known for making AI servers, was added to the S&P 500. According to data from S&P Global Market Intelligence, Supermicro stock rose 17% last month.
Admission to the broad-market index caps off a dramatic run for Supermicro, as the company is also known, and the stock has gained nearly 1,000% since the start of 2023 after it emerged as a winner in the generative AI boom.
As you can see from the chart, the stock jumped early in the month on the S&P 500 news before giving up much of those gains and then rebounding to close out the end of March.
Super Micro Computer joins the S&P 500
The big news in March for Supermicro was the stock was admitted to the S&P 500. Not only does that act as a strong affirmation of the company's growth and its ability to maintain and grow its current level of business, but it also means that index funds that track the S&P 500 need to buy the stock, increasing demand for it.
S&P Global (NYSE: SPGI) made that announcement after hours on Friday, March 1, and Supermicro stock jumped 19% on March 4 on that news and continued to climb from there over the rest of the week before peaking at an intraday high of $1,229 on March 8.
Later in the month, the stock pulled back after the company filed to sell 2 million shares, raising nearly $2 billion for the company. While it seems like a smart move for Supermicro to take advantage of its elevated stock price by raising new capital, investors tend to dislike secondary offerings, as they dilute existing shareholders and sometimes make a company look like it can't fund its growth out of profits.
Image source: Getty Images.
What's next for Supermicro?
Like Nvidia, Supermicro is seeing revenue skyrocket from soaring demand related to its AI servers. The company has even said that growth is constrained by the limited supply of Nvidia's GPUs, but it also needs to defend its market share from challengers like Dell Technologies and Hewlett Packard Enterprise.
Raising the $2 billion is likely geared toward staying ahead of the competition, investing in new products, and ramping up production as demand soars.
Revenue doubled in the most recent quarter. That growth rate won't last forever, but if Supermicro can remain the leader in AI servers, the stock is likely to continue to be a winner.
