Super microcomputer (NASDAQ:SMCI) will announce its fiscal 2024 third quarter financial results on Tuesday, April 30th. Unlike in previous years, the company did not provide any positive business insights or data for the third quarter, causing the stock to drop 18% for the month. Nevertheless, strong artificial intelligence (AI)-driven demand for the company’s products could boost sales and bottom line in the third quarter.
Super Micro provides high-performance server and storage solutions.
SMCI: Third quarter forecast
Analysts expect SMCI’s third-quarter sales to be $4.01 billion, up about 213% from $1.28 billion in the year-ago period. The company’s sales are expected to benefit from strong demand for AI and rack-scale total IT solutions, as well as improved supply of GPUs and other key system components.
Additionally, SMCI’s management emphasized on the second quarter conference call that demand for AI inference systems and mainstream computing solutions is accelerating. This will support the overall top line in the third quarter.
Meanwhile, Wall Street expects SMCI to post earnings of $5.83 per share, up significantly from $1.63 in the year-ago quarter. Strong revenue growth and cost-cutting efforts should support his SMCI’s bottom line. However, the company’s investments aimed at increasing market share and acquiring new customers are likely to put pressure on profit margins.
Is SMCI a good stock to buy?
SMCI is benefiting from strong demand, strong order backlog, new customer acquisition and improving supply chain conditions. The stock price has risen significantly, up about 716% in one year. Given the strong rally, analysts are cautiously optimistic about SMCI stock.
Overall, SMCI stock has a “Moderate Buy” consensus rating based on 7 buys, 3 holds, and 1 sell recommendations. Analysts’ average price target for SMCI stock is $965.64, suggesting limited upside potential at 12.62% from current levels.
Insights from options trading activity
While analysts are cautiously optimistic on SMCI stock, options traders are pricing in earnings volatility of +/-14.84%, which is higher than last quarter’s earnings-related volatility of 3.49%.
The expected movement is determined by calculating the at-the-money straddle of the option closest to expiration after the earnings announcement.
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conclusion
SMCI could benefit from strong demand from new and existing customers for AI and rack-scale total IT solutions, increasing orders and backlogs from top-tier data centers, and improving supply chain conditions. there is. However, SMCI stock has risen significantly over the past year, as reflected in analysts’ average price target, which could limit its upside potential.
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