Here’s why the SMCI stock price is nearing a golden cross

The Super Micro Computer (NASDAQ: SMCI) stock price extended its rally on Friday as the artificial intelligence supercycle gained momentum. It jumped to $48, its highest point since November 25, up by 145% from its lowest point this year. This rally may continue soon as the Supermicro stock nears a golden cross pattern. 

SMCI stock surge triggered by Dell earnings

The Super Micro Computer stock price has done well in the past few days as the AI supercycle gained steam. On Thursday, the rally was because the company said that it had collaborated with Taiwan’s authorities to intercept an illegal smuggling operation. This operation led to the capture of 50 servers that were destined for the Chinese market.

In most cases, such a law enforcement announcement don’t move stocks. However, in Supermicro’s case, it is quite positive because the company has been battling to clean its image after a major lawsuit that was filed in March. 

This lawsuit accused three people, including its co-founder of smuggling NVIDIA (NASDAQ: NVDA) in China. As a result, the company received several class action lawsuits. 

The main reason behind the ongoing Dell stock price surge is that Dell, its top competitor, reported strong financial results and a forward guidance. Its stock jumped by as much as 40%, leading to more gains across companies in the industry. HP Enterprise (NYSE: HPE) stock surged by over 11% to $42.63. Similarly, in Hong Kong, Lenovo stock price soared to a record high this year.

Super Micro issued strong guidance despite Q3 weakness

The recent earnings by these companies mean that there is still strong demand for its products. As a result, analysts are optimistic that it will return to growth after struggling in the previous quarter.

The most recent Q3 earnings showed that its net sales came in at $10.2 billion, down from $12.7 billion in Q2. This revenue was nonetheless much higher than the $4.6 billion it made in the same period last year.

Super Micro Computer’s net income was $483 million, up sharply from the $109 million it made in Q3’23. 

The management and analysts tracking the company expects its revenue growth to continue. The average estimate among analysts is that its annual revenue will jump by 80% to $39 billion, followed by $51.3 billion in the following year. 

SMCI is also trading at a bargain because of its past issues. It has a forward price-to-earnings (PE) ratio of 15, lower than the average S&P 500 Index average of 23.

Super Micro Computer stock technical analysis

SMCI stock price chart | Source: TradingView

The daily chart shows that the SMCI share price bottomed at $19.55 in March and has now rebounded to $45. It has already completed filling the gap it made in March after the US lawsuit against its founder.

The stock is now approaching a golden cross pattern as the 50-day and 200-day weighted moving average (WMA) crossover nears. This pattern is one of the most common bullish continuation signs in technical analysis.

Therefore, the stock will likely continue rising in the coming days, potentially to the key resistance at $58.76, its highest point on October 5.