Stock market star Super Micro Computer – is the stock a buy?

Last Updated: 5. März 2024By

On Friday, S&P announced which companies will be included in the important US index S&P 500 in March. Not surprisingly, the high-flyer of recent months, Super Micro Computer, is one of the two newcomers.

The stock has experienced an incredible rally in recent months and now has a market capitalization of over 55 billion US dollars.

Why does everyone want this stock? It’s simple: Super Micro Computer is the leading manufacturer of servers for artificial intelligence, which are in high demand in the age of AI.

Super Micro Computer: Hype or real future stock? Super Micro Computer is a leader in the field of liquid cooling. Its servers can reduce power consumption and operating costs by 40% compared to other manufacturers. Given the high demand for computing power in the age of AI, this is an important factor.

During the presentation of the latest quarterly results, the company not only reported rapidly increasing revenues and profits, but CEO Charles Liang also emphasized that the AI revolution could continue for decades. Therefore, it can only be considered a short-term hype for this stock. In the long term, the growth prospects remain very good.

The only thing currently holding the company back is the shortage of chips, especially the limited availability of powerful Nvidia GPUs, Liang said. In an interview with Bloomberg TV, he stressed that the company could already sell servers worth $25 billion per year if it weren’t for the chip shortage.

Should you invest in Super Micro Computer now? However, Super Micro Computer not only relies on Nvidia. They also use AI chips from AMD or Intel. This allows the company to benefit from the AI mega trend, regardless of whether Intel remains the market leader in the coming years or if other competitors catch up with AI chips.

How do you handle the current situation? Is it still a good time to invest?

I recommended Super Micro Computer to my readers back in March 2023, when no one was talking about the stock. Currently, the position in the Lehne’s MegaTrends yield portfolio is up +815%, and after taking partial profits, we still hold two-thirds of the original position.

For me, Super Micro Computer is still a buy for long-term oriented investors. However, there may be setbacks in the short term. Consider carefully when the risk-reward ratio is ideal if you want to add the stock to your portfolio.