Super Micro Computer (SMCI) saw its shares rise by over 13% at the time of writing after the company revealed some shipment data that enthused investors. More specifically, the AI server company said that it has recently installed over 100,000 GPUs that use its liquid cooling systems in AI factories, which have drastically improved their energy efficiency by lowering power demand by up to 40%.
This is certainly welcome news for investors who have seen the value of their shares go on a rollercoaster ride in recent months. In fact, SMCI stock had soared to a split-adjusted price of $122.90 per share at its peak in March. However, a short-seller report from Hindenburg Research, combined with a poorly-timed announcement from the company stating that it was delaying its annual report to review its accounting procedures, sent shares plunging.
In fact, the stock has continued to struggle since then as it remains 60% off its peak. Nevertheless, SMCI is still up 67% on a year-to-date basis, which demonstrates just how volatile shares have been in 2024. For the investors who had the stomach to handle the stock, they have been rewarded with significant outperformance compared to the S&P 500 (SPY), which has gained 20% during the same timeframe.
Is a Short-Squeeze in the Cards?
An interesting piece of information is that short interest in Super Micro remains above 20% of its free float, according to market research firm Ortex. Therefore, it is possible that today’s rally might be caused by short sellers buying shares to close their bets. If this is the case, it also suggests that a potential short squeeze could be in the cards, which would push shares higher.
Is SMCI Stock a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Hold consensus rating on SMCI stock based on three Buys, 10 Holds, and one Sell assigned in the past three months, as indicated by the graphic below. Furthermore, the average SMCI price target of $64.36 per share implies 35.67% upside potential.
