Can SMCI's Q4 performance impress investors as AI investment sentiment cools down?

SMCI.US will announce its 4Q 2024 earnings after market close on Tuesday, August 6. Wall Street analysts expect SMCI to report revenue of $5.294 billion and earnings per share of $8.20.

SMCI's earnings report in early May showed a significant increase in both revenue and net income. The company also raised its full-year revenue guidance to $14.7-15.1 billion from $14.3-14.7 billion. At the midpoint of the range, SMCI's revenue is expected to grow by about 582% to $14.9 billion, above analysts' estimate of $14.6 billion.

Investors betting on the potential of artificial intelligence (AI) see SMCI as a possible major supplier of servers with Nvidia chips, driving the stock up nearly 250% last year and a big jump in the stock's price in the year.

However, as investors demand more tangible results from AI investments and as concerns about a U.S. economic recession grow, SMCI's stock has fallen 25% in the past few weeks. The stock market volatility at the time of SMCI's earnings announcement may require a strong quarter to impress investors, especially after the stock fell more than 7% last Friday.

SMCI's stock is likely to remain volatile for the rest of 2024. If investors are looking for exposure to data centers, AI and cloud computing, SMCI may be worth considering. Wall Street analysts are bullish on SMCI, with an average target price of $978, reflecting a potential increase of nearly 60%.