The Dive of Super Micro Computer Stock on Wednesday Morning

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Super Micro Computer (NASDAQ: SMCI), also known as Supermicro, has been on a remarkable journey over the past year. With the increasing demand for artificial intelligence systems and the hardware to support them, the company’s stock had surged by over 700%. However, after releasing its latest quarterly report, the market responded with profit-taking, causing the stock to drop by as much as 18.5%.

Breaking Down the Numbers

In their fiscal 2024 third quarter, Supermicro reported a 200% year-over-year revenue increase to $3.85 billion. Adjusted earnings per share also saw a significant rise of 308% to $6.65. While profits exceeded expectations, revenues fell slightly short of analyst estimates.

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CEO Charles Ling pointed out that the company is facing supply chain challenges, particularly for components in its direct liquid-cooled servers. These servers are in high demand as AI requirements grow, leading to slightly lower-than-expected revenue growth. Ling remains optimistic that these bottlenecks will ease in the coming quarters, with plans to continue gaining market share.

Looking Ahead

Despite the recent stock drop, Supermicro raised its full-year revenue outlook to $14.7 billion to $15.1 billion, indicating a potential 109% year-over-year growth. With the stock trading at approximately 2 times expected forward sales, investors should consider the long-term potential of Super Micro Computer.

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Investing with Wisdom

Before making any investment decisions, it’s crucial to weigh your options carefully. The Motley Fool Stock Advisor team recently identified the top 10 stocks for investors to consider, with Super Micro Computer not making the list. This curated selection has historically provided remarkable returns and invaluable guidance for investors.

For example, when Nvidia was recommended in 2005, a $1,000 investment would be worth over $529,390 today. This highlights the potential for substantial returns when investing wisely.

Whether you choose to invest in Super Micro Computer or explore other opportunities, our goal at Extreme Investor Network is to equip you with the knowledge and tools needed for successful investing. Stay tuned for more updates and insights to help you navigate the world of finance.

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Danny Vena has positions in Super Micro Computer. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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