Super Micro Computer Stock: A Screaming Buy Before It Jumps 170%
Super Micro Computer stock has pulled back since hitting a 52-week high in August. Its terrific growth suggests that investors should consider capitalizing on this pullback. The company is sitting on a fast-growing AI opportunity that could accelerate growth.
Recent Pullback Doesn't Seem Justified
Super Micro Computer's fiscal 2023 fourth-quarter results brought its red-hot rally to a halt, but a closer look suggests that investors were simply looking for a reason to book profits. The company delivered strong growth and issued an encouraging outlook, raising its full-year guidance.
Susquehanna analyst Mehdi Hosseini recently downgraded the stock, citing margin pressure and valuation. However, Super Micro's focus on enhancing its manufacturing capacity could lead to stronger-than-expected growth. Super Micro recently raised its global capacity to 5,000 server racks per month, and management believes it could hit annual revenue of over $20 billion in the next couple of years.
An Attractively Valued AI Stock with Upside Potential
Super Micro stock is currently trading at just 2 times sales and 24 times trailing earnings, making it very cheap for the growth it has been delivering. With its focus on the AI server market, which is experiencing rapid growth, Super Micro is well-positioned to capitalize on this trend. Its server solutions are in high demand due to their customization options, making them ideal for deploying AI chips.
Based on its current sales multiple, if Super Micro achieves its goal of generating $20 billion in annual revenue over the next two to three years, the company's market capitalization could jump to $40 billion, representing a 170% upside from current levels.
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