Following a premarket surge and then a near-12% Friday plunge, Super Micro Computer Inc (SMCI) has exhibited its most decisive week, capping off a record-breaking year in the artificial intelligence (AI) sector. The server manufacturer’s stock’s premarket increase of 5.6% after a remarkable 36% weekly gain marks its most significant one-week percentage rise on record.
Notably, the stock is on a winning streak of 10 sessions, the longest in nearly a decade, and has risen in 18 of the last 20 sessions, with an exceptional more than 250% increase this year, after a 246% gain in 2023.
The astronomical surge reflects robust demand for its servers, intrinsic to AI applications, with Wall Street analyst consensus soaring by leaps and bounds.
Bank of America’s initiation with a buy rating and a Street-high price target has heralded an incredible 50% average compound annual growth rate in the AI server market over the next three years, with Super Micro being a key beneficiary.
Analysts are upbeat, with a 52% rise in the consensus for the company’s net 2025 earnings and a similar increase in revenue projections, as per Bloomberg data. Nevertheless, this optimism has led to a stock valuation driving its relative strength index to 97, hinting at potential overbuying.
Wells Fargo Securities entered the stock scene with an equal-weight rating, suggesting that the company’s current share price may already reflect the anticipated growth.
Nonetheless, the company’s momentum in AI, driven by its engineering focus, could justify a reevaluation of its valuation, according to analyst Aaron Rakers.
The company’s formidable performance was a harbinger in January when preliminary quarterly results significantly surpassed expectations, leading to an upgraded revenue forecast.
Despite its phenomenal growth, Super Micro’s market valuation of over $56 billion seems relatively modest when compared to other AI-focused companies, trading at 39 times estimated earnings.
At present, SMCI shares traded lower by 11.20%, resting at $891.78 on the last check of Friday.
This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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