Shares of Super Micro Computer (SMCI 3.49%) were moving higher today after the company delivered strong fiscal second-quarter results and impressed the market with its guidance.
Supermicro had already reported preliminary results, so the second-quarter numbers weren’t a surprise, but the guidance made it clear that the company’s rapid growth from the artificial intelligence (AI) boom will continue for the rest of the year.
As of 1:21 p.m. ET, the stock was up 3.1% after trading up as much as 11.9% earlier in the session.
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Supermicro impresses again
Supermicro has been one of the best-performing stocks on the market since the start of 2023. The maker of high-density servers and storage equipment has emerged as a beneficiary of the AI boom as training AI models requires fast response times and handling large volumes of data, something its hardware excels at.
Supermicro said revenue jumped 103% in the quarter to $3.66 billion, well ahead of the earlier analyst consensus at $3.06 billion and the company’s original guidance of $2.7 billion to $2.9 billion.
Gross margin fell from 18.7% to 15.4%, but adjusted earnings per share still soared from $3.43 to $5.59, topping estimates at $4.93.
CEO Charles Liang said, “While we continue to win new partners, our current end customers continue to demand more [of] Supermicro’s optimized AI computer platforms and rack-scale Total IT Solutions.”
Momentum is building
Supermicro lifted its guidance aggressively for the current quarter and full year. For the third quarter, the company expects revenue of $3.7 billion to $4.1 billion, and adjusted earnings per share of $5.20 to $6.01, up from $1.63 in the quarter a year ago. For the full year, the company raised its revenue guidance from $10 billion-$11 billion to $14.3 billion-$14.7 billion, implying revenue will jump 104% for the full year.
Based on those numbers, Supermicro stock looks affordable at a forward P/E ratio of less than 30, though investors seem to believe this boom will be short-lived.
At this point, the company has more demand than it can serve, and there’s no sign of a slowdown. While Supermicro is a cyclical business, with the AI boom just ramping up, there still seems to be considerable upside potential in the stock.
Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool recommends Super Micro Computer. The Motley Fool has a disclosure policy.
