Watch These Supermico Price Levels as Stock Pops After Volatile Year
Sunday, Jan 5, 2025 11:20 pm ET
3min read Super Micro Computer (SMCI) shares are back in the spotlight after a rollercoaster 2024, with the stock surging more than 10% on Friday, January 3, 2025. The server specialist snapped a five-session losing streak and logged its best one-day performance since early December, as investors cheered the company's efforts to move past accounting-related issues and a potential Nasdaq delisting. But with the stock still trading well below its record high, investors should keep an eye on key support and resistance levels to navigate the volatile market.
Supermicro's recent rally can be attributed to a combination of factors, including the company's efforts to address its accounting and corporate governance issues, as well as positive developments in the broader market. Microsoft's (MSFT) announcement that it plans to spend about $80 billion this fiscal year on data centers that power artificial intelligence (AI) has also boosted sentiment, as Supermicro is well-positioned to benefit from increased partnerships and hardware sales in the AI server market.
However, investors should remain cautious, as Supermicro's stock price remains highly volatile, and the company's fundamentals have been lackluster in recent years. The server maker's revenue growth rate was just 1.43% in 2024, and its earnings per share (EPS) of $0.551 are well below the forward EPS of $4.24. Additionally, Supermicro's forward P/E ratio of 9.03 suggests that the stock may still be undervalued, but the company's slow earnings growth and negative cash flow could weigh on investor sentiment.
As Supermicro continues to navigate the challenges of accounting-related issues and a volatile market, investors should monitor key support and resistance levels to make informed decisions about the stock's future direction. The company's recent rally is a positive sign, but investors should remain vigilant and consider the company's fundamentals and the broader market dynamics before making any investment decisions.
Action Alerts PLUS, which Cramer manages as a charitable trust, is long SMCI.
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