Super Micro Computer (SMCI) Stock Dips in Warning for AI Rally – InvestorPlace
Super Micro Computer (NASDAQ:SMCI) missed its revenue estimate slightly, sending SMCI stock down 10% in pre-market trading.
Net income of $492 million, $6.56 per share fully diluted, and revenue of $3.85 billion weren’t good enough. Analysts wanted $3.86 billion in sales.
Super Micro was due to open this morning at $775 per share, a market capitalization of about $45 billion. SMCI stock was trading for over $900 per share early yesterday.
Balloon Pops?
Even though SMCI CEO Charles Liang insisted that the business is great and people are wonderful, investors see the stock as too pricey. Super Micro is still well above where it was just two weeks ago, but headlines don’t say that.
Instead, Investors Business Daily called the year-over-year tripling of sales “mixed results.” Barrons called it all bad news. The Wall Street Journal said sales fell short. Investorpedia called it “a slump on a revenue miss.”
But was it? The revenue miss was $10 million on sales of nearly $4 billion. That’s a rounding error. The company beat earnings estimates by over $1 per share. Liang predicted that SMCI would “continue to gain market share,” projecting June quarter revenue of $5.1-5.5 billion. He projected a profit of $8.42 per share for the June quarter, against analyst estimates of $6.97.
More likely, some investors saw SMCI’s quarter as a good reason to take profits. The stock was selling at 67 times earnings before the fall and well over three times revenue. The values of all stocks related to artificial intelligence (AI), especially those supporting the infrastructure boom, have become extreme. When everyone is in a trade, prices generally fall.
Before earnings, only one of Tipranks’ 11 analysts on SMCI had it rated as a sell. Sentiment among traders on Stocktwits remains bullish. One just said, “The premarket move doesn’t make any sense.”
SMCI Stock: What Happens Next
If SMCI’s March quarter represented failure, I don’t know what success is. But it’s also important to remember that you don’t have a profit until you sell and put money in your pocket. Post-earnings sellers took profits.
On the date of publication, Dana Blankenhorn did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
This post was originally published on 3rd party site mentioned in the title of the post.