Super Micro Computer (SMCI 3.49%) stock posted significant gains again in Tuesday’s trading. The company’s share ended the daily session up 3.5%, according to data from S&P Global Market Intelligence.
After the market closed yesterday, Super Micro Computer published results for its fiscal second quarter — which ended Dec. 31. The company posted sales and earnings performance that came in ahead of the market’s expectations, and it also issued encouraging forward guidance.
When Super Micro published upward guidance revisions for the second quarter on Jan. 18, it spurred massive gains for the stock. Notably, the company’s actual performance for the period came in even better than the high end of its updated targets.
The business posted non-GAAP (adjusted) earnings per share of $5.59 on revenue of $3.66 billion, beating the upper range of its updated guidance’s call for per-share earnings of $5.55 on sales of $3.65 billion. Super Micro also raised its full-year sales target to between $14.3 billion and $14.7 billion, up from its previous guidance for sales to come in between $10 billion and $11 billion.
Is Super Micro Computer stock a buy right now?
Super Micro Computer’s sales more than doubled in fiscal Q2, and net income rose 68% to reach roughly $296 million. For the fiscal third quarter, Super Micro is guiding for sales to be between $3.7 billion and $4.1 billion. Meanwhile, management expects adjusted earnings per share to come in between $5.20 and $6.01.
The company’s targets suggest that the business is on track to deliver significant sequential quarterly growth and huge leaps over the performance it posted in fiscal Q3 last year. Rapid growth for artificial intelligence applications is translating to surging demand for Super Micro’s server and storage technologies, and it looks like this tailwind will continue to be strong in the near term.
With its market capitalization sitting at roughly $27.4 billion, Super Micro Computer stock could still have room to run. The business has been growing at impressive rates, and the company’s share price could surge if AI-related demand continues to spur strong sales and earnings momentum.
On the other hand, investors should approach the stock with the understanding that it’s already posted explosive gains and future business performance could be uneven. Super Micro stock is a high-risk, high-reward play, and investors should weigh their personal risk tolerance before initiating or adding to a position.
Keith Noonan has no position in any of the stocks mentioned. The Motley Fool recommends Super Micro Computer. The Motley Fool has a disclosure policy.
