3 No-Brainer Reasons to Buy Super Micro Computer Before Its Stock Split - Motley Fool

Ultra Micro Computer (SMCI) experienced a very volatile market this year. The stock price soared from $280 at the beginning of the year to close to $1,200, then fell to about $500 after the fourth quarter earnings fell short of expectations. However, with the upcoming 10-share split plan to be implemented on October 1, the stock price will drop to about $50. Despite the fall in the share price, there are three important reasons why now is a good time to buy the stock:

An important role in AI infrastructure: Ultramicrocomputers are critical to AI infrastructure, providing highly customized and energy-efficient servers, and the company raised its long-term revenue target from $15 billion to $50 billion.

Strong outlook for fiscal year 2025: Although earnings per share (EPS) for the fourth quarter fell short of expectations, Ultramicrocomputer expects revenue growth of 88% in fiscal year 2025, while growth in the first quarter is expected to reach 207%.

Attractive valuations: The current stock price is more reasonable, and the forward-looking price-earnings ratio is 15.6 times, making it a worthy purchase before the stock split. The company has a bright future in the next few years.

Super Micro Computer (SMCI) has had a volatile year, with its stock price soaring from $280 to nearly $1,200 before falling to around $500 after a disappointing Q4 earnings report. However, a 10-for-1 stock split on Oct. 1 will reduce the price to about $50 per share. Surprising the Dip, There Are Three Reasons to Buy the Stock:

Vital role in AI infrastructure: Supermicro is critical for AI infrastructure, highly efficient, energy-efficient servers, with a long-term revenue goal of $50 billion, up from $15 billion.

Strong Fiscal 2025 Outlook: Absence Missing Q4 EPS Guidance, Supermicro Revenue Growth 88% Revenue Growth in Fiscal 2025, with Q1 Growth Assessment at 207%.

Revaluation: The stock is now more likely to earn at 15.6 times forward earnings, making it a good buy before the stock split. The company is well-balanced for future success.