Shares of Super Micro Computer (NASDAQ:SMCI) witnessed a significant surge of over 11% in premarket trading following the company’s upward revision of its second-quarter guidance.
The company attributed the optimistic outlook to robust market conditions and heightened demand from end customers for its rack-scale, AI, and Total IT Solutions during the second quarter, concluding on December 31. Consequently, Super Micro Computer revised its net sales projection to a range of $3.6 billion to $3.65 billion. This marks a substantial increase from the earlier guidance, which ranged from $2.7 billion to $2.9 billion.
Furthermore, the adjusted earnings per share are now anticipated to fall between $5.40 and $5.55, up from the initial estimate of $4.40 to $4.88.
In response to this announcement, Barclays analysts increased their price target for Super Micro Computer stock from $335 to $396, maintaining an Overweight rating. The analysts highlighted that the company likely shipped approximately 9,000 AI servers in the December quarter, aligning with the bank’s supply chain assessments. This growth was attributed to an improvement in GPU supply and robust demand for AI.
Anticipating growth in the March quarter to be at least in line with historical seasonality, Barclays analysts expect a quarter-over-quarter (Q/Q) growth in the mid-single digits. They also anticipate another guidance increase for the fiscal year 2024 when Super Micro Computer reports later in January.
Meanwhile, analysts at Rosenblatt revised their firm’s price target for SMCI to $550 from $430, maintaining a Buy rating on the stock. They believe that liquid cooling and strategic hyperscale engagement are driving the upside. The analysts interpret the substantial upside in guidance for the December quarter (70% sales growth Q/Q compared to consensus of 30%) as not simply an incremental “allocation” from Nvidia within the quarter. They suggest that the upside was likely propelled by hyperscale ‘allocations.’
The overall positive market sentiment and analysts’ bullish outlook on Super Micro Computer indicate that the company is well-positioned to capitalize on the increasing demand for its innovative solutions in the AI and Total IT space. The upward revision in guidance underscores the company’s strong performance and its ability to meet the growing needs of the market. Investors are optimistic about the potential for sustained growth, as indicated by the upward adjustments in price targets and ratings by analysts.