Sign InSuper Micro Computer poised for recovery amid AI growth and short squeeze speculation
Summary
Despite experiencing a decline in its stock price, Super Micro Computer, Inc. is expected to recover and potentially move towards its resistance level, supported by growth in the AI sector and speculation of a short squeeze, making it a potential Buy according to market analysis and news sentiment.
Introduction
Super Micro Computer, Inc. (SMCI), a technology firm listed on NASDAQ, ended with a last close of $253.73 on August 16, 2023, with a decline of $10.49 (-3.97%). Notably, the day's low and high figures were $251.86 and $263.85, respectively, while the annual highs and lows stood at $357 and $50.28. Super Micro Computer currently has a market capitalization of $13.32 billion and transacted 2.45 million shares, which is below its average volume of 3.27 million. The firm has 52.49 million shares outstanding.
Technical Analysis
SMCI has been trading below its 50-day moving average of $274.54, indicating a bearish trend in the recent past. Its 200-day moving average stands at $144.78, which shows long-term bullish momentum. Meanwhile, the RSI14 reading of 33 suggests that the stock is close to being oversold. The MACD for the last three months is 14.26, suggesting bullish momentum, while the Average True Range (ATR) of 8.49 signals a highly volatile stock. Additionally, the firm has a support level at $234.1 and immediate resistance at $254.43.
Fundamental Analysis
Super Micro Computer, Inc.'s EPS is $10.47, and it has a PE ratio of 24.23, suggesting a fairly valued stock relative to earnings. The firm's earning announcement is scheduled for October 30, 2023. According to the discounted cash flow method, SMCI's fair value is $261.60, which is slightly higher than its current price, making it undervalued as per DCF.
Industry analysts offer a high price target of $300, with no one presenting a lower target. The consensus suggests an expectation for the stock to appreciate. The majority recommendation for SMCI is to "Buy" with two buy recommendations and only one hold recommendation.
News Analysis
The news highlights suggest that despite a substantial plunge following its recent earnings report, Super Micro Computer is expected to bounce back, supported by robust growth in the Artificial Intelligence (AI) sector. The firm's recent earnings fall seems to have presented a buying opportunity due to its significant market share gains in AI server solutions. Additionally, there is speculation around a possible short squeeze affecting heavily shorted stocks, raising the possibility of an upward price movement in stocks like SMCI.
Stock Prediction
Given this analysis, it is expected that the stock price of SMCI could see moderate recovery in the next trading day, August 17, 2023, and may potentially move towards the resistance level of $254.43 by the upcoming week. This assumption is based on the technical and fundamental analysis, along with the market sentiment as per news reports.
Final Evaluation
Considering the stock's moderate undervaluation according to DCF, prospective growth in the AI business, positive news sentiment, and market analyst consensus, SMCI's stock can be classified as a "Buy". However, potential investors should also note that the RSI and the 50-day moving average indicate bearish sentiment, and volatility is high. These risks should be mitigated accordingly.
