
Super Micro Computer (SMCI) stock forecast: time to buy the dip?
- Super Micro Computer shares have surged by over 210% this year.
- The company’s revenue grew by over 200% in the first quarter of the year.
- This growth momentum has more room to run in the coming years.
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Super Micro Computer (NASDAQ: SMCI) stock price has lost momentum in the past three months even as American equities surged to their all-time high. It was trading at $895 on Tuesday, down by almost 27% from its highest point this year.
Growth concerns have remained
Copy link to sectionSuper Micro Computer’s shares have come under intense pressure in the past few months as concerns about its growth continued.
This performance happened even after the firm published strong financial results. First quarter revenues soared by 200% to over $3.85 billion, helped by the record demand for its AI rack scale DLC systems from Nvidia and AMD.
The revenue figures are notable because they were higher than what the company made in the 2021 financial year when it made $3.5 billion. Also, the company boosted its forward revenue guidance for the year.
It expects to make $15.1 billion this year, representing a 112% annual growth rate while analysts anticipate that the 2025 revenue figure will be over $24 billion. This makes SMCI one of the fastest-growing companies in the United States. Nvidia, which grew by over 220% in Q1 is another one.
Super Micro has also become one of the most profitable companies in the industry. Its annual net profit figure rose from $71.5 million in 2019 to over $640 million in 2023. Most recently, its quarterly profit came in at over $400 million and this trend will continue.
Altogether, Super Micro’s valuation seems reasonable to me based on its strong revenue and profitability growth. A compilation by SeekingAlpha shows that it has a forward PE ratio of 40 and a forward EV to EBITDA multiple of 30.78.
These multiples are higher than the sector median of 30.20 and 15, respectively. However, they are better than other semiconductor companies. AMD has a forward PE ratio of 103 and a forward EV to EBITDA multiple of 40. Nvidia’s figures stand at 41.6 and 33, respectively.
To be sure: I still expect that Super Micro Computer’s annual growth rate will slow down as this AI hype cools. Still, I see it having double-digit growth figures in the foreseeable future, which will help to support its stock.
SMCI stock price forecast
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Turning to the daily chart, we see that the Super Micro Computer shares have stalled recently. That happened after the stock completed the impulse wave of the Elliot Wave chart pattern. It has now remained above the 50-day and 100-day Exponential Moving Averages (EMA), a positive sign.
The stock has also remained above the crucial support level at $671, its lowest swing in April. At the same time, the Relative Strength Index (RSI) has moved above the neutral point.
Therefore, the stock’s outlook is extremely bullish, with the initial resistance level to watch being at $1,231, its highest point on record. This means that it could jump by over 37% from the current level.
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