Yahoo Finance Bull of the Day: Super Micro Computer (SMCI)
Super Micro Computer (SMCI) reported their March quarterly earnings on April 30 and inspired analysts to once again boost growth estimates for the provider of key datacenter infrastructure in the early innings of the AI boom.
After SMCI delivered strong numbers and guidance, the Zacks Consensus EPS estimate for the current fiscal year (ends June) rose 6% from $22.15 to $23.51, representing 99% annual growth.
And next fiscal year jumped over 17% from $28.95 to $34, which would equate to a 44.6% advance.
These rising profits are being drawn from equally impressive growth on the topline, with the current year approaching a 110% leap to nearly $15 billion and next year's projections are stalking $24 billion for another 60% surge.
I Remember Ye Yay High
As a devoted NVIDIA (NVDA) investor, I like to remind others that "as goes GPU demand, so goes datacenter build-out." And just as investors continue to doubt NVIDIA's growth as having any sustainability, so too they miss its little satellites profiting from the boom.
It seems it was only a few months ago when SMCI was a $300 stock. That's because it was only 4 months ago when, in late January, the company pre-announced December quarter results and the stock launched 36% the next day.
I first wrote about the "shock and awe" of a datacenter architect most investors had never heard of in my Bull of the Day from January 28. Here's some of what I shared...
They call themselves "Supermicro" and describe their business simply and powerfully...
Supermicro is a global technology leader committed to delivering first-to-market innovation for Enterprise, Cloud, AI, Metaverse, and 5G Telco/Edge IT Infrastructure. We are a Rack-Scale Total IT Solutions provider that designs and builds an environmentally-friendly and energy-saving portfolio of servers, storage systems, switches, software, along with global support services.
And on January 19 they stunned Wall Street with preliminary revenue of $3.6 billion, which tore through prior guidance of $2.7-2.9 billion, representing 100% year-over-year growth for the company's fiscal Q2.
Earnings for the quarter are projected to spike to $5.55 a share, topping analysts estimates of $4.50 EPS.
The company cited strong market and end customer demand for its rack-scale, AI and Total IT Solutions.
For its current fiscal year which ends in June, Supermicro is on pace to deliver 53% topline growth to nearly $11 billion and 40% EPS growth to cross $16.50.
And even after the huge rally in SMCI shares this month, with projected 15% revenue growth to cross $12.5 billion next year the stock still trades at only 2 times sales!
(end of excerpt from my Jan 28 article)
AI Boom, or AI Bubble?
What should jump out is that less than four months ago we were talking about $11 billion and $12.5 billion on the Supermicro toplines for this year and next. Now those numbers are $15 billion and $24 billion!
And the stock still trades for 2X sales as I talked about in my video from May 7, where I also discuss SMCI volatility since the surge to $1,200 as investors debate whether or not this is all just an "AI bubble."
In that video, I explain why SMCI dropped 23% on April 19. The reason revolves around expectations for another stunner preannounce (like in January) that didn't come. So expectations and fears clashed as hopes were dashed.
But I also said the storm is over, estimates are still rising, and investors should be looking to buy under $800. You got two more chances this week.
Be sure to watch the 7-minute video to see the key price support level that held after earnings and gave way to a 16% rally on May 15 to $950.
With NVIDIA earnings on deck May 22, we can look forward to another set of data points about the AI debate. My bet is that both NVDA and SMCI will be trading above $1,000 very soon as the boom continues and the bulls win.
Disclosure: I own shares of NVDA and SMCI for the Zacks TAZR Trader portfolio.
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