Artificial intelligence remains integral to the current and future businesses of megacaps like Nvidia, Tesla, Microsoft, Meta Platforms, and Amazon.com. And that means big business for Super Micro Computers, or Supermicro, a key supplier of servers and other AI infrastructure.
As it jumps onto the Investor's Business Daily Breakout Stocks Index, SMCI stock continues to emerge from a long slump as it now takes aim at a fresh buy point. That's just one of several reasons Supermicro is back in the Wall Street spotlight.
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Supermicro Sees Big Growth Ahead — And New AI Business Opportunity
Based in the heart of Silicon Valley in San Jose, Calif., Supermicro provides IT infrastructure for AI data centers, 5G, cloud computing, the metaverse and beyond. It designs and builds servers, storage systems, switches, and related software.
On Tuesday, Supermicro unveiled a new business line — data center building block solutions. According to the company, the new system will enable organizations to design, order, and build complete data centers from a single vendor, reducing time-to-online and improving overall quality and serviceability. Now available, the complete data center building block product includes servers, storage, management software, liquid cooling infrastructure, networking, and electrical components. Supermicro says the new system enables organizations to simplify the entire data center build out.
As the company rolls out this AI-focused business line, Wall Street forecasts spiking growth in upcoming quarters.
In August, Supermicro posted results for the fourth quarter of fiscal 2025, ended June 30. Sales rose 8% to just over $5.7 billion. Earnings growth slowed 24% to 41 cents per share.
Analysts see another slowdown in earnings growth for the first quarter of fiscal 2026 when the company reports on Nov. 4. But then Wall Street expect earnings and sales growth to accelerate.
In the second quarter of fiscal 2026, analysts forecast a 15% earnings growth to 59 cents a share on a 34% revenue spike to just under $6.5 billion. For the third quarter, estimates call for earnings growth to accelerate 109% to 65 cents per share. Sales are expected to jump 79% to more than $7.6 billion.
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AI Fuels Demand For SMCI Stock
Signs of demand for SMCI stock include a B+ Accumulation/Distribution Rating and two quarters of rising fund ownership.
After notching a record high in March of last year, Supermicro fell into a long slump. But since finding a bottom in November of last year, shares launched a rebound, albeit a bumpy one.
After resetting its base count last year, Supermicro is now building a first-stage cup pattern. The buy point is 62.36. The stock is also forming a handle, which would offer an earlier entry at 58.69.
Several promising indicators bode well for the stock. It trades solidly above its 50-day moving average. Plus, the shorter-term 21-day exponential moving average has recently climbed back above the 50-day benchmark.
In a sign of rising market leadership, the relative strength line has perked up, but remains shy of a 52-week high.
But in the current market environment, investors should continue to heed rules for both how to buy stocks and when to sell. That includes watching the action around key moving averages. Bellwether names like Nvidia and Microsoft are clinging to support at the 50-day line, while Amazon and Meta have retreated below that benchmark. Tesla stands well above its 50-day line as it tries to hold support at its 21-day exponential moving.
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Follow Matthew Galgani on X (formerly Twitter) at @IBD_MGalgani.
