Super Micro Computer – Is this a great opportunity?

Super Micro Computer has failed to meet expectations: instead of the expected earnings per share of $8.07, the company reported only $6.25 for the last quarter. The immediate consequence: the share price plummeted. Despite this setback, JPMorgan (NYSE:JPM) recommends buying now.
 
In previous quarters, Super Micro had regularly exceeded Wall Street's expectations – sometimes by 12 per cent, sometimes by 15 per cent. But in the most recent quarter, the company was unable to impress. Sales were almost exactly in line with expectations at $5.32 billion, namely $5.31 billion. However, earnings per share were well below forecasts.
 
Super Micro Computer: rising to the IT elite
 
"Super Micro's gross margin is noticeably weaker, although demand was higher than expected," said JPMorgan analyst Samik Chatterjee, commenting on the latest figures. However, Chatterjee remains extremely optimistic and still believes the share price could rise to $950.
 
Despite the current share price loss of around 17 per cent, there is positive news: CEO Charles Liang emphasised that the company is "well positioned to become the largest IT infrastructure company". For the first quarter of the new financial year, Liang expects revenues of six to seven billion dollars – more than analysts had forecast. For the full financial year, he expects revenues of between 26 and 30 billion dollars, while analysts had previously only assumed 23.6 billion.
 
Is this a huge opportunity or will the share price continue to plummet?
 
No company in the world is able to exceed expectations. Despite this failure, we see a very big opportunity coming our way.
 
The share initially reacted very well to the purple box between $762.52 and $618.42 and rose sharply. This was a very good opportunity to enter the sustainable upward trend. We did not buy the stock at that time because we suspected that it was not over yet. And then there was a sharp drop in prices, but already on 20 June 2024 and not just now with the publication of the quarterly figures.
 

 
The current figures are only putting additional pressure on the share price. We published an analysis for our members on our website one day before the quarterly figures were published on 5 August 2024, clearly stating that the share price would fall significantly. This is completely accurate.
 

 
The price has followed our forecast exactly, initially rising to the red box zone we defined at $694.97 to $797.44, before entering a downward spiral.
 
We see the target of the correction in the purple box between $469.48 and $263.01. The ideal range is between $459.37 and $386.43 (please see the small violet box in the chart).
 
And we agree with the view of the analyst at JPMorgan. The correction should be over soon and then Super Micro Computer will in all likelihood be a very rewarding stock with a very high upside potential.
 
But now it's a matter of details. We'll wait until the correction is over and the bottom has been confirmed. Then we'll buy. There is a definite risk of even lower prices.
 
We don't want to show off our expertise, but rather demonstrate that we take our responsibility towards our members very seriously, because they can rely on us to work carefully and ensure a consistently high return.
 
You can find out more about us on our website, which you can access via the link next to my profile picture above this text.
 
Disclaimer/Risk warning:
The information provided here is for informational purposes only and does not constitute a recommendation to buy or sell. It should not be understood as an explicit or implicit assurance of a particular price development of the financial instruments mentioned or as a call to action. The purchase of securities involves risks that may lead to the total loss of the capital invested. The information provided does not replace expert investment advice tailored to individual needs. No liability or guarantee is assumed, either explicitly or implicitly, for the timeliness, accuracy, appropriateness or completeness of the information provided, nor for any financial losses. These are expressly not financial analyses, but journalistic texts. Readers who make investment decisions or carry out transactions based on the information provided here do so entirely at their own risk. The authors may hold securities of the companies/securities/shares discussed at the time of publication and therefore a conflict of interest may exist.