Super Micro Computer, Inc. (NASDAQ: SMCI) stock is trading lower on Thursday in sympathy with the broader semiconductor selloff led by its clients, including Nvidia Corp (NASDAQ: NVDA) and Advanced Micro Devices, Inc (NASDAQ: AMD).
Despite the selloff, analysts continue to praise Nvidia as a critical AI play, suggesting the ongoing potential for the AI frenzy. The dip in the market has made the valuation of semiconductor companies more appealing as entry points.
Super Micro Computer stock has seen a 136% increase in the last 12 months and currently has a price-to-earnings multiple of 13.73x. Nvidia, which has gone up by 176%, is currently trading at a 33.16 PE multiple.
Recently, Taiwanese rail kit supplier Nan Juen International Co, a partner of Super Micro Computer, inked a deal with Nvidia to increase rail kit production for GB200 AI servers.
The market value of AI servers is projected to exceed $187 billion in 2024, with a growth rate of 69% driven by demand from major CSPs and brand clients, according to TrendForce.
The market potential for AI servers, fueled by demand from tech giants like Nvidia, AMD, Amazon.Com Inc (NASDAQ: AMZN), Amazon Web Services, and Meta Platforms Inc (NASDAQ: META), is influencing the trajectory of Super Micro Computer’s stock price.
Super Micro Computer reported a topline growth of 144% in the fourth quarter. Analysts anticipate the company’s margin weakness to recover by fiscal 2025, easing the competitive pricing environment.
Investors looking to get exposure to Super Micro Computer can consider Invesco QQQ Trust, Series 1 (NASDAQ: QQQ) and SPDR S&P 500 (NYSE: SPY).
At last check on Thursday, SMCI shares were trading lower by 2.77% at $606.50.
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This article What’s Going On With Super Micro Computer Stock On Thursday? originally appeared on Benzinga.com
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