Super Micro Computer (NASDAQ:SMCI) is an artificial intelligence server manufacturer that has garnered a lot of attention in 2024. Super Micro Computer stock is a fast mover, no doubt, but it earns an “A” grade and has the potential to head higher this year.
The share price drop of over 20% shook out some short-term traders earlier this month. Informed investors remain calm in such situations. Understand the sell-off and assess Super Micro Computer’s value.
Super Micro Computer’s Market Share Could Double
In a recent research note, KeyBanc Capital Market analyst Tom Blakely made some eye-opening estimates. His numbers will surely change your perception of Super Micro Computer’s growth potential.
Per Barron’s, Blakely estimates that Super Micro “has about 6% of the server infrastructure market, including an estimated 10% share of the AI server segment.” That’s already a decent portion of a market where the products are in high demand.
Yet, this could just be the first chapter of a much bigger story. Indeed, Blakely believes that Super Micro Computer’s “AI position can surge to 23% of the market this year.”
Furthermore, Blakely seems to suggest that this wouldn’t just be a temporary blip on the radar.
He asserts that Super Micro Computer’s “competitive moats… should sustain if not expand this share in coming years.”
If that’s the case, then it’s easy to envision the company’s market capitalization expanding rapidly in 2025, 2026 and so on.
Why Super Micro Computer Stock Dropped
Super Micro Computer stock is an undeniable year-to-date winner, but always remember that stocks don’t just go straight up. There will be down days along the way, including some big drops.
A well-publicized example of this happened when the Super Micro Computer share price declined 23% on April 19.
The stock was still up significantly on a year-to-date basis, but some worry warts apparently got shaken out of the trade on that day.
Again, it’s important to know why a stock drops, rather than just panic-selling and asking questions later. So, here’s what happened. Super Micro Computer chose not to pre-release its third-quarter fiscal 2024 financial results.
Seriously, that’s what the big selloff was about. Sure, Super Micro Computer pre-released its earnings results in previous quarters. However, companies aren’t required to do this, and most companies don’t do it.
Short-term stock traders can be excessively reactive and often have overactive imaginations.
They can drum up excuses to sell stocks with scarcely any provocation. Informed investors, meanwhile, can just stay relaxed and rational, as the big-picture assessment of Super Micro Computer shouldn’t change with every short-term share-price move.
Super Micro Computer Stock: Add Ultra AI Power to Your Portfolio
There’s no guarantee that Super Micro Computer’s AI-server market share will double, but it’s a possibility to consider. With that in mind, imagine how much bigger Super Micro Computer’s market cap could grow in the next few years.
Since the Super Micro Computer share price tends to fluctuate quickly, there’s no need to over-invest. However, the general trend is certainly to the upside.
Super Micro Computer stock earns an “A” grade as it offers high-confidence, leveraged AI-market portfolio exposure.
On the date of publication, Louis Navellier had a long position in SMCI. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
