HomeMarket NewsThe Rise of Super Micro Computer: A Stock Split in the Making?

The Rise of Super Micro Computer: A Stock Split in the Making?

Actionable Trade Ideas

always free

Super Micro Computer (NASDAQ: SMCI) operates behind the curtain, powering the future AI revolution with its cutting-edge servers and storage solutions. The soaring demand for these products has propelled the company’s earnings into the stratosphere, causing investors to take notice and send the stock price skyward. Since the shadows cannot contain this success story any longer, many are now wondering: can we expect a stock split from this AI powerhouse?

An investor works at a laptop in an office.

Image source: Getty Images.

The Case for a Stock Split

Let’s delve into why a stock split might be on the horizon. A stock split involves a company issuing additional shares to current shareholders to reduce the price per share, keeping the market value unchanged. The primary outcome is that shares become more affordable for a wider investor base. Accessibility is key, as some brokerages don’t offer fractional shares, and many investors prefer to hold full shares. Therefore, a stock split could attract a broader audience to invest in the company.

Despite its meteoric rise, Super Micro Computer has yet to undergo a stock split. Previously, the stock lingered around $10, rendering a split unnecessary. However, recent market activity has seen the share price surge past $1,000 and then retreat.

Last month, the company’s decision to sell 2 million shares led to a temporary setback in share price. The proceeds are earmarked for operational support, ensuring smooth inventory procurement and enhanced research efforts. Although Super Micro Computer has recovered from its price dip, it has yet to reclaim the $1,000 summit.

Thriving Amidst Boom Times

In the midst of this financial fervor, Super Micro Computer remains a beacon of growth, with its latest earnings report boasting a record-breaking $3 billion quarter. The sustained demand for AI systems is propelling the company to new heights, with the potential for this trend to endure for years to come.

Super Micro Computer closely monitors product releases from tech giants such as Nvidia and Intel, integrating their latest innovations seamlessly into its offerings. The upcoming releases from these industry leaders, like Nvidia’s Blackwell architecture and chips, are expected to further bolster sales for Super Micro Computer.

This upward trajectory suggests that Super Micro Computer’s shares may flirt with the $1,000 threshold once more, making it an ideal candidate for a stock split. While stock splits typically don’t directly impact a company’s fundamentals, they can enhance accessibility, which could cultivate sustained interest in the stock over time.

Despite the recent share sale, I believe a split announcement might not be imminent as management focuses on stabilization. However, if the stock continues to rally, a stock split could potentially be in Super Micro Computer’s playbook in the coming weeks.

Investing Insights: Super Micro Computer and Beyond

Prior to diving into Super Micro Computer, consider the insights from the Motley Fool Stock Advisor team, which has pinpointed the 10 best stocks for investors to consider for robust returns in the future. While Super Micro Computer didn’t make this exclusive list, the highlighted stocks have the potential to deliver substantial gains in the years ahead.

Stock Advisor equips investors with a clear roadmap for success, offering guidance on portfolio construction, analyst updates, and two fresh stock picks each month. Since 2002, the Stock Advisor service has surpassed the S&P 500 returns by a significant margin*

Discover the 10 stocks

*Stock Advisor returns as of April 4, 2024

Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool recommends Intel and suggests options like long January 2023 $57.50 calls on Intel, long January 2025 $45 calls on Intel, and short May 2024 $47 calls on Intel. The Motley Fool adheres to a transparent disclosure policy.

The opinions expressed are solely those of the author and do not necessarily reflect the stance of Nasdaq, Inc.

Swing Trading Ideas and Market Commentary

Need some new swing ideas? Get free weekly swing ideas and market commentary from Jonathan Bernstein here: Swing Trading.

Explore More

Weekly In-Depth Market Analysis and Actionable Trade Ideas

Get institutional-level analysis and trade ideas to take your trading to the next level, sign up for free and become apart of the community.