Stock Tip Tuesday…

Is Super Micro Computer the next Nvidia?

^_News
Super Micro Computer to Join S&P 500

On Friday, Super Micro Computer ($SMCI) was selected to join the S&P 500. The news has led to a 21% increase in the share price since Friday.

$SMCI will replace Whirlpool ($WHR) in the index from market open on the 18th of March.

One of $SMCI’s independent directors has completed an ‘intent to sell’ form. He wants to sell 5k shares, which at its current price of $1,090 per share is worth $5.45m. This is a lot, and could be a cause for concern.

News is a bit mixed, but overall positive on this company.

_{^Fundamentals}
$SMCI Fundamentals

The AI boom is the clear cause of $SMCI’s insane rally. (Crucially, $SMCI is a primary vendor for building Nvidia’s AI servers.)

Shares are up twentyfold in the last 2 years.

Their market cap has risen rapidly from $4.5b in late 2022 to $61b today.

$SMCI’s revenue more than doubled in Q4 2023 to $3.66b. Analysts estimate sales will more than triple this quarter.

Earnings are forecast to grow by 31% this year.

Honestly, these numbers are giving me Nvidia vibes all over again.

AI has been massive in growing existing prominent companies such as Microsoft and Nvidia. Now is definitely the time to start looking at other, less major players such as $SMCI.

Before the AI boom, $SMCI had already established a good reputation for being a reliable IT infrastructure and solutions provider. AI has simply brought more attention to the stock.

Almost all of $SMCI’s products are geared towards AI, which is great for future growth and means that its products are basically future-proofed.

Companies like AMD, Intel and Nvidia have been long-time clients of $SMCI, even before the AI boom. So even though the company may not have a direct stake in AI, its products put it in the sector’s beneficiaries.

Like I said, I am seeing a lot of similarities with $SMCI at the moment and what Nvidia looked like a few years ago. We may well be looking at the next candidate to join the Magnificent Seven.

^_Evaluation
So, Should You Buy?

The numbers are eye-watering, and its future potential quite frankly has me hard.

The recent skyrocket in price does have potential investors wondering if it’s too late to get in on $SMCI though, but we disagree.

We think a company like this could be a future gold mine. The AI wave is also by no means over and it’s not too late to capitalise off it.

Maybe I’m stupid to invest so much into AI and tech, but the numbers are impossible to ignore.

Maybe you missed out on Nvidia, Meta etc. Doesn’t mean you need to miss out on potential future giants like $SMCI.

_{^{Thank you}}
That’s All Folks

Thanks for reading. Like usual. Not financial advice.

Full disclaimer here.

Cheers,