Super Micro Computer (SMCI 0.48%), commonly called Supermicro, has been one of the biggest beneficiaries of the artificial intelligence (AI) revolution. Heading into the company's earnings report, the stock had gained more than 700% over the preceding year, so expectations were high.
Despite stellar results, investors wanted more, and the stock slumped 14% in a single day. One analyst thinks the selling has simply gone too far.
NASDAQ: SMCI
Key Data Points
Too much is never enough
In the wake of its drubbing earlier this week, Barclays analyst George Wang raised his price target on Supermicro to $1,000 while maintaining an overweight (buy) rating on the shares. That represents potential upside of 31% compared to the stock's closing price on Thursday. The analyst cited Supermicro's robust results and strong guidance as fueling his optimism.
The analyst has a point. For its fiscal 2024 third quarter (ended March 31), Supermicro generated record revenue of $3.85 billion that surged 200% year over year. This resulted in adjusted earnings per share (EPS) of $6.65, which soared 308%. CEO Charles Liang noted that not only had the company gained market share, but he expected that trend to continue.
Furthermore, Supermicro increased its full-year guidance such that it expects revenue to grow 109% at the midpoint of its guidance. That hardly seems like a reason to sell.
Wang pointed out that the numbers point to sequential revenue increases in each of the coming two quarters, which will be bolstered by supply chain improvements and AI-fueled tailwinds.
If that wasn't enough, and as a result of its drubbing, Supermicro stock is currently selling for less than 2 times forward sales, giving savvy investors the opportunity to pick up this AI superstar at a bargain. But don't expect this sale to last long.
