Super Micro Computer stock is causing quite a stir among traders this week since the company joined the S&P 500 on Monday. This move comes as the company’s shares have seen remarkable gains over the past year thanks to the artificial intelligence (AI) boom.
For those not residing on Wall Street, you might be wondering, “What exactly is Super Micro?” Well, Super Micro Computer is a major player in the AI scene that you've probably never heard of. In simple terms, it's the company behind the servers for AI giant Nvidia. And here's a little spoiler: it's not just Nvidia they're serving; this company has become a top supplier for many businesses and even governments.
Operating mostly behind the scenes, this hidden gem has generated huge returns. SMCI stock has been a big winner over the last year, soaring a whopping 800% as of this writing. As its value keeps climbing, it's gaining more recognition, leading to its inclusion in the S&P 500 index.
With a current valuation of around $50 billion, it first went public on the Nasdaq in 2007 with a market capitalization of $250 million. So, if you had invested $1,000 during its IPO, you'd be sitting on $200,000 today.
On a large scale, things look brilliant, but let’s take a closer look.
Super Micro Computer stock took a sharp 9% dive on Tuesday after the company announced plans to sell off 2 million shares.
This decision was met with criticism from investors who feared it could dilute their shares and reduce their value. Moreover, on top of the 2 million shares, Super Micro has made an additional 300,000 shares available for sale through investment bank Goldman Sachs, acting as the underwriter.
Super Micro stated in the filing that the primary purpose of this offering is to secure extra capital to support its operations, including inventory purchases.
Despite this setback, analysts maintain an optimistic outlook on the stock, believing there's still plenty of room for growth amid the ongoing AI boom. And we certainly agree with their assessment.
