Artificial Intelligence Server Company Super Micro Computer, Inc (NASDAQ:SMCI) shares are trading lower on Thursday in line with the broader semiconductor sell-off led by its customers, including Nvidia Corp (NASDAQ:NVDA) and Advanced Micro Devices, Inc. (NASDAQ:AMD).
Despite the sell-off, analysts continue to hail Nvidia as the critical AI player, signaling continued potential for the AI craze. The sell-off has made the semiconductor companies’ valuations more attractive entry points.
Super Micro Computer stock has risen 136% over the past 12 months and is currently trading at a price-to-earnings ratio of 13.73x. Nvidia, which has risen 176%, is currently trading at a price-to-earnings ratio of 33.16x.
Recently, Taiwanese rail kit supplier Nan Juen International Coa partner of Super Micro Computer, struck a deal with Nvidia to ramp up production of rail kits for GB200 AI servers.
According to TrendForce, the AI server market value could exceed $187 billion by 2024, representing a growth rate of 69%, driven by the demand for advanced AI servers from major CSPs and brand customers.
The market potential for AI servers, supported by demand from major tech giants including Nvidia, AMD, Amazon.Com Inc (NASDAQ:AMZN), Amazon Web Services and Meta Platforms Inc (NASDAQ:META) explains the price development of Super Micro Computer.
Super Micro Computer reported topline growth of 144% in the fourth quarter. Analysts expected the AI server company’s weak margins to recover by fiscal 2025, reducing the competitive pricing environment.
Investors can gain exposure to Super Micro Computer through Invesco QQQ Trust, Series 1 (NASDAQ:QQQ), and SPDR S&P 500 (NYSE:SPY).
Price promotion: SMCI shares were down 2.77% to $606.50 at last check on Thursday.
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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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