Super Micro Computer (NASDAQ: SMCI) has been on an incredible run throughout the last yr, and it’s attracting loads of attention on Wall Street. On Monday, Goldman Sachs analysts published a note initiating coverage on Supermicro. The investment firm assigned a “neutral” rating on the stock, indicating that it doesn’t recommend buying or selling shares immediately.
Goldman’s analysts also put a one-year price goal of $941 per share on the stock. With the artificial intelligence (AI) stock priced at roughly $1,140 per share, which may imply potential downside of 17% over the next yr. Has Supermicro stock turn into too dangerous?
Can Supermicro stock keep rising or is it time to sell?
In Goldman’s note on Supermicro, the analysts indicate that the massive run-up for the server specialist’s valuation has been warranted. The analysts pointed to the company’s strengths inside the high-performance server market and standing as an “AI winner” with helpful business relationships as legitimate catalysts for its incredible stock gains. Supermicro’s share price is up greater than 1,000% throughout the last yr.
Alternatively, Goldman now thinks that the vast majority of the positive near-term growth catalysts are already priced into the stock. Provided that Super Micro Computer stock is trading at roughly 52 times this yr’s expected earnings, the stage may be set for shares to see some volatility inside the near term. In any case, the stock could go on to deliver stronger long-term performance, even when Goldman’s team winds up being exactly correct with its pricing forecast.
Explosive gains have pushed Supermicro stock to more speculative valuation levels, nevertheless the business’s outlook is evolving in very favorable directions. I’d not recommend selling the stock immediately.
For investors with high-risk tolerance, I feel taking a buy-and-hold approach to the stock could still have substantial payoffs. But investors should take a balanced approach to constructing their portfolio of AI stocks and avoid betting too heavily on any single name or making huge investments abruptly — particularly in cases where valuations have seen dramatic run-ups.
Do you will have to take a position $1,000 in Super Micro Computer immediately?
Before you buy stock in Super Micro Computer, consider this:
The Motley Idiot Stock Advisor analyst team just identified what they consider are the 10 best stocks for investors to buy now… and Super Micro Computer wasn’t one among them. The ten stocks that made the cut could produce monster returns within the approaching years.
Stock Advisor provides investors with an easy-to-follow blueprint for achievement, including guidance on constructing a portfolio, regular updates from analysts, and two latest stock picks every month. The Stock Advisor service has greater than tripled the return of S&P 500 since 2002*.
*Stock Advisor returns as of March 8, 2024
Keith Noonan has no position in any of the stocks mentioned. The Motley Idiot has no position in any of the stocks mentioned. The Motley Idiot has a disclosure policy.
1 Wall Street Analyst Thinks Super Micro Computer Stock Is Going to $941. Is It a Sell Around $1,140? was originally published by The Motley Idiot