Super Micro Computer Inc. (Nasdaq:SMCI) jumped 12.4% to close out Thursday with an $871.10 share price. The Silicon Valley-based company doing business as Supermicro had struggled to keep pace with the stock market since March, when it replaced Whirlpool (NYSE:WHR) in the S&P 500, despite more than tripling over the past 12 months. Volume came in at 11.5 million shares, or double the daily average.
Driving the surge appears to be published reports of talks scheduled with Loop Capital Markets and Northland Capital Markets. Securities and Exchange Commission filings reveal that two directors recently sold shares.
The business
Rare among U.S. companies in the Information Technology sector, Supermicro actually makes computers -- not the ones you do office work or play World of Warcraft on, but the heavy-duty, industrial-strength variety. When Nvidia (Nasdaq:NVDA) makes a chip, it often ends up in a Supermicro chassis. The company also makes the storage and network devices that optimize the performance of its rack-mounted servers.
SMCI is a stock for those who missed the Nvidia boat. Just as Nvidia made the semiconductors business sexy, Supermicro seeks to do the same for the particularly unglamorous computer hardware market. It's doing that by finding ways to coming out with more energy-efficient, as well as more powerful, data center components, and by expanding into both Europe and Asia.
The numbers
Supermicro posted $7.1 billion in fiscal 2023 sales. Fiscal 2024 -- which ends June 30 -- is on track to more than double that. The company's quarterly earnings announcements almost always surprise to the upside so, not surprisingly, SMCI commands higher valuation multiples than its peers. Its 42.8x price-to-earnings ratio is higher than the IT sector as a whole, and far exceeds the hardware industry's 30.9x.
Both fundamental and technical signals are strong for Supermicro.
Stocks.News does not have positions in companies mentioned
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William Freedman, MBA, is a New York-based financial writer and former Wall Street stock analyst. He volunteers his time as a trained leader with Scouting USA.