Here’s why Super Micro Computer stock is pumping today and what next

Super Micro Computer stock price jumped by over 15% on Wednesday after the company published strong financial results, which showed that its business continued to fire on all cylinders in its third quarter. It jumped to $32, its highest level since March 17, filling the gap it made after a major lawsuit against its founder was filed.

Super Micro Computer stock jumps after earnings

The SMCI stock price jumped after the server company released its financial results, which showed that its business continued doing well in the third quarter.

Its financial results revealed that its revenue jumped by 123% in the third quarter to over $10.2 billion as demand from companies in the artificial intelligence (AI) industry soared. This growth may accelerate as top companies like Microsoft, Google, and Meta Platforms publish boost their capital expenditure plans.

The net income rose to $483 million, higher than the $401 million it made in the same quarter a year earlier. In a statement, the CEO said:

"Our margin recovery and the rapid growth of our DCBBS business demonstrate that our business remains robust. With the addition of our new US manufacturing facilities in Silicon Valley, we are exceptionally well positioned to meet the massive demand.”

The company’s guidance implies that its growth will accelerate in the coming quarters. Its expectation is that its sales will be between $11 billion and $12.5 billion in its fourth quarter. This estimate was higher than the average estimate of $11.31 billion.

These numbers come a few months after the stock plummeted by double digits after the co-founder was charged with diverting $2.5 billion worth of servers with NVIDIA chips to China. The US has banned NVIDIA from selling its chips to the Chinese market.

In response, Supermicro announced that it had placed him on an administrative leave and terminated its relationship with others mentioned in the report. The lawsuit did not accuse the company of any wrongdoing.

Supermicro has come under scrutiny before, with the most prominent one being in 2024 when Hindenburg Research accused the company of accounting manipulation, self-dealing, sanctions evasion, and other crimes. 

It denied these claims and launched an independent review led by Secretariat Advisors, which found no evidence of misconduct by the management.

Another major concern among investors is competition, which has jumped in the servers industry, with the top players being companies like Dell and HP Enterprise.

SMCI stock price technical analysis 

Supermicro stock | Source: TradingView 

The daily timeframe chart shows that the SMCI stock price crashed on March 19 this year after the co-founder was sued by the US authorities.

It then started crawling back as bulls attempted to fill the gap, which it has now achieved. The stock moved above the 50-day Weighted Moving Average (WMA), confirming the bullish outlook.

The Relative Strength Index (RSI) has jumped and crossed the important neutral point at 50. Therefore, the uptrend will likely continue this week, with the next key target to watch being at $35, its highest point in February. A move above that level will point to more upside, potentially to $40.