Super Micro Computer (SMCI) Analysis


Chart done on hourly timeframe. Super Micro Computer is an electronic technology company that manufactures a brand range of information technology and computer products and solutions. The company’s leading customers are names such as Nvidia, AMD, and Intel, all of which expected to grow in double digit percentage points in the next year. Demand for computer technology and semiconductors has given companies such as SMCI a chance to substantially grow their business. We’ve seen this reflected in the company’s revenue over the last four years, where the company went from reporting 3.56B in annual revenue in 2020 to doubling revenue in 2023 to 7.12B. Many tech companies struggle to maintain profitability as revenue grows, SMCI’s net income has grown alongside revenue, gaining more than 100% per year in 2022 and 2023. This proves competence in their leaders’ abilities to use revenue wisely and still maintain a positive income. Their balance sheet reflects about a 2:1 ratio between assets and liabilities, a healthy relationship; however their free cash flow is a bit light around 591M. 

The company’s valuation is currently at 16.77B, which is fair, but they must maintain their revenue growth to keep investors’ attention. Their current P/E ratio is 29, which is on the higher end of the “healthy” 15-25 average. Much of retail traders and investors attention goes to the obvious names in the semiconductor space, but the savvy ones will look at Super Micro Computer as an opportunity to to get in on something that hasn’t overextended its rally yet. Going in 2024, their earnings should be watched closely along with their forward guidance. If the company can maintain the growth projections then they’re set to do well. 

Technical analysis: 

SMCI just broke out of a long range channel pattern that has been developing since June of last year. As shown on the chart, they attempted a move into strong bullish territory this week, but failed after buying volume was long. They can go one of two ways from here, which is either they hold the channel down retest or fail to move back into the previous consolidation range.