Advertisement

Supermicro scales new peak after revenue forecast raise re-ignites AI rally

FILE PHOTO: COMPUTEX Taipei technology trade show in Taipei

(Reuters) -Super Micro Computer shares hit a fresh record high on Tuesday after the artificial intelligence server maker delivered blowout quarterly results and raised its full-year revenue forecast significantly ahead of Wall Street estimates.

Shares of the company, which also benefits from demand for its liquid cooling solutions from data centers processing more generative AI applications, was last up 6% at $525.31.

Supermicro's upbeat 2024 revenue forecast, raised to $14.3 billion to $14.7 billion from $10 billion to $11 billion and above analysts' average estimate of $11.51 billion, also lifted other AI-related companies.

Shares of Nvidia, the biggest beneficiary of the AI hype, rose 1.1% on Tuesday, while Microsoft, an early investor in ChatGPT-maker OpenAI, added 0.4%. Microsoft is expected to report results after market close.

At least four brokerages raised their price target on Supermicro, with Rosenblatt setting the highest target at $700, up from $550.

"SMCI is the Switzerland of AI," said Rosenblatt analyst Hans Mosesmann, highlighting that the company has benefited from increased orders from new and existing customers.

Supermicro's stock has more than tripled since May last year when CEO Charles Liang said the generative "AI momentum has benefited Super Micro greatly."

The company's valuation has gone up by $10 billion to $27.53 billion after a third-quarter outlook boost earlier this month, which it beat.

Super Micro, which counts NASA and Japan's NEC among its customers, reported a 17% jump in third-quarter net sales to $3.66 billion from a year earlier, and adjusted earnings per share (EPS) of $5.59 - both above its latest forecast from less than two weeks ago.

Analysts on average had expected $2.87 billion in revenue and $4.55 EPS.

Supermicro trades 24.9 times its earnings estimate for the next 12 months, below Nvidia's multiple of 30.5, per LSEG data. A lower multiple indicates the stock is trading cheaper compared to its earnings potential.

(Reporting by Medha Singh in Bengaluru; Editing by Shinjini Ganguli)