S&P 500   4,981.80
DOW   38,612.24
QQQ   425.61
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How major US stock indexes fared Wednesday, 2/21/2024
Germany says Europe's largest economy is in 'troubled waters' and cuts its growth forecast
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Housing data weakens, but Toll Brothers stock is still a buy
Teladoc Health gaps down to support level after weak guidance
S&P 500   4,981.80
DOW   38,612.24
QQQ   425.61
Palo Alto Networks, Keysight fall; Garmin, Toll Brothers rise, Wednesday, 2/21/2024
Is Gold Really Boring? (Ad)
Palo Alto Networks aims at cyber security leadership
3 Reasons the Capital One-Discover merger is a big deal
Is Gold Really Boring? (Ad)
How major US stock indexes fared Wednesday, 2/21/2024
Germany says Europe's largest economy is in 'troubled waters' and cuts its growth forecast
Gold Could Be Heading for Record Highs - But How to Play It? (Ad)
Housing data weakens, but Toll Brothers stock is still a buy
Teladoc Health gaps down to support level after weak guidance
S&P 500   4,981.80
DOW   38,612.24
QQQ   425.61
Palo Alto Networks, Keysight fall; Garmin, Toll Brothers rise, Wednesday, 2/21/2024
Is Gold Really Boring? (Ad)
Palo Alto Networks aims at cyber security leadership
3 Reasons the Capital One-Discover merger is a big deal
Is Gold Really Boring? (Ad)
How major US stock indexes fared Wednesday, 2/21/2024
Germany says Europe's largest economy is in 'troubled waters' and cuts its growth forecast
Gold Could Be Heading for Record Highs - But How to Play It? (Ad)
Housing data weakens, but Toll Brothers stock is still a buy
Teladoc Health gaps down to support level after weak guidance
S&P 500   4,981.80
DOW   38,612.24
QQQ   425.61
Palo Alto Networks, Keysight fall; Garmin, Toll Brothers rise, Wednesday, 2/21/2024
Is Gold Really Boring? (Ad)
Palo Alto Networks aims at cyber security leadership
3 Reasons the Capital One-Discover merger is a big deal
Is Gold Really Boring? (Ad)
How major US stock indexes fared Wednesday, 2/21/2024
Germany says Europe's largest economy is in 'troubled waters' and cuts its growth forecast
Gold Could Be Heading for Record Highs - But How to Play It? (Ad)
Housing data weakens, but Toll Brothers stock is still a buy
Teladoc Health gaps down to support level after weak guidance

Super Micro's super surge: 18.87% gain to begin the year

Key Points

  • Hardware maker Super Micro has successfully ridden the coattails of AI juggernauts Nvidia, Intel and AMD.
  • In November, the company raised its fiscal 2024 outlook to $10 billion to $11 billion in revenue.
  • Analysts expect year-over-year earnings and revenue growth when the company reports its second quarter in late January. 
  • 5 stocks we like better than Super Micro Computer

Super Micro Computer Inc. NASDAQ: SMCI started 2024 with a bang, rallying 18.87% in the past week. 

The stock is in a buy zone, trading just below its January 10 high of $357.99.

The company's business doesn't sound glamorous: It makes high-efficiency server and storage systems for enterprise data centers, cloud computing, artificial intelligence, 5G and edge computing. The latter processes data close to the source to boost efficiency.

Benefiting from other companies' success

There's an old investing concept called "cousin stocks," which refers to a company that benefits from another's success. You don't hear that term so much anymore, but the phenomenon is alive and well. 

Super Micro has been riding the coattails of AI leaders Intel Corp. NASDAQ: INTCNvidia Corp. NASDAQ: NVDA and Advanced Micro Devices NASDAQ: AMD because it works closely with all of them.


That means Super Micro collaborates with these big chip makers to develop hardware designed to complement chip capabilities, rolled out to the market simultaneously. 

"Our collaborative approach with these vendors allows us to coordinate the design of our new products with their product release schedules, thereby enhancing our ability to rapidly introduce new products incorporating the latest technology," the company said in a regulatory filing.

Products supporting Intel, Nvidia and AMD

For example, in the company's fiscal 2023, which ended in June, Super Micro announced over 50 products supporting Intel’s new Sapphire Rapids data center central processing unit. It also released products to support AMD’s Genoa data center CPU, and workstations to support the new Nvidia H100 GPUs.

CEO Charles Liang cited ongoing supply constraints for graphics processing units when the company reported results for the first quarter of fiscal 2024 in November. 

“We are working diligently to meet these challenges, and given my confidence in my team and the strong demand we are seeing for AI infrastructure and compelling new and upcoming compute and storage products, we are now raising our fiscal year 2024 outlook to $10 billion to $11billion in revenue,” he said in the release statement.

Stocks that perform well by hitching their wagons to others' stars are typically smaller and less well-known, which is the case here. With a market capitalization of $19.07 billion, Super Micro has grown but is not yet a component of the S&P 500. That's because so many other tech stocks have grown into giants recently. 

Under analysts' radar

Small is a relative term, but Super Micro doesn't command the same attention from Wall Street analysts as its behemoth customers do. 

MarketBeat's Super Micro Computer analyst forecasts show fairly sparse coverage versus those of the tech titans tracked in the Technology Select Sector SPDR Fund NYSEARCA: XLK.

Wall Street analysts frequently cover a stock if they believe there's investment banking, lending or other business from a company. As a company grows, there's a greater likelihood that analysts will jump on the bandwagon.

That, in turn, brings greater attention from institutional investors. As a bonus, analysts typically initiate coverage with a positive rating, which lures institutional investors. 

Steady increase in trading volume

Take a look at Super Micro’s chart. You can see a steady increase in trading volume since April 2022. The volume increase was even more pronounced than in larger stocks like Intel, Nvidia and AMD.

Super Micro stock took a hiatus starting in August and cleared a buy point above $357 on January 10. The stock pulled back in the following session but remains in a buy zone; investors may want to wait until it shows a day of upside trade before jumping in rather than chasing it lower. 

The company reports its fiscal second quarter on January 30, with analysts expecting earnings of $3.87 a share on revenue of $2.78 billion. Both would be year-over-year increases. The company is expected to grow earnings by 48% this year to $17.47 per share. 

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Should you invest $1,000 in Super Micro Computer right now?

Before you consider Super Micro Computer, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Super Micro Computer wasn't on the list.

While Super Micro Computer currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The Five Stocks Here

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Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Super Micro Computer (SMCI)
4.817 of 5 stars
$734.17-6.8%N/A57.31Moderate Buy$689.20
Intel (INTC)
4.6753 of 5 stars
$43.47-2.4%1.15%111.46Hold$41.48
Technology Select Sector SPDR Fund (XLK)N/A$199.16-0.7%0.65%20.04HoldN/A
Advanced Micro Devices (AMD)
4.4327 of 5 stars
$164.29-0.8%N/A315.95Moderate Buy$179.06
NVIDIA (NVDA)
4.7979 of 5 stars
$674.72-2.9%0.02%89.01Moderate Buy$701.93
Compare These Stocks  Add These Stocks to My Watchlist 

Kate Stalter

About Kate Stalter

  • stalterkate@gmail.com

Contributing Author

Retirement, Asset Allocation, and Tax Strategies

Experience

Kate Stalter has been a contributing writer for MarketBeat since 2021.

Additional Experience

Series 65-licensed investment advisor, financial advisor, Blue Marlin Advisors; investment columnist for Forbes, U.S. News & World Report

Areas of Expertise

Asset allocation, technical and fundamental analysis, retirement strategies, income generation, risk management, sector and industry analysis

Education

Bachelor of Arts, Saint Mary’s College, Notre Dame, Indiana; Master of Business Adminstration, Kellogg School of Management at Northwestern University

Past Experience

Founder, financial advisor for Better Money Decisions; editor, stock trading instructor for Investor’s Business Daily; columnist, podcast host, video host for MoneyShow.com; contributor for Morningstar magazine


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