Super Micro Stock Price (SMCI) Makes $60 Breakout As Stock Doubles YTD

Super Micro Computer's stock price (NASDAQ: SMCI) has built up a head of steam this year, before finally breaking $60 resistance in Monday's session, as buyers continue to step in.

SMCI added an impressive 10.24% yesterday to close out at $60.05, to not only break the level, but the close above for only the second time this year (Feb 19th being the other). With this morning's pre-market action indicating a further move higher to $61, Super Micro's stock will have more than doubled since the start of the year.

One of the most significant catalysts for SMCI's recent surge is the $20 billion partnership with DataVolt, a Saudi Arabian data center company.

This five-year agreement involves supplying GPU platforms and rack systems for DataVolt's AI campuses in Saudi Arabia and the United States and is projected to nearly double Super Micro's revenue over the next five years, providing a substantial boost to its financial outlook.

What has been driving SMCI this year?

• $20 Billion Partnership: Deal with DataVolt expected to nearly double revenue over 5 years
• Financial Resolution: Addressed reporting issues and avoided potential Nasdaq delisting
• Strong Growth Projections: 70% revenue and 48% EPS growth forecast for FY2025
• FY2024 Performance: 110% revenue increase to $14.9B with 87% earnings growth
• Superior Profitability: 34% ROE vs. industry average of 20.3%

With previous financial reporting challenges also in the rear view mirror, markets have begun to focus more on fundamentals and cleared a significant hurdle for future growth.

Super Micro's strategic collaborations with tech giants like NVIDIA, Intel, and AMD have further solidified its position in the AI server market. The company's introduction of SuperCluster solutions powered by NVIDIA's latest GPUs caters to the escalating demand for AI infrastructure and has given the stock a boost, as do most when NVIDIA collaborations come into play.

CEO Charles Liang's comments present a clearly bullish view, believing the company to be “well positioned to become the largest IT infrastructure company, driven by our technology leadership, including rack-scale DLC liquid cooling and business values of our new Datacenter Building Block Solutions,”.

With SMCI having broken above $60, the question now is whether the stock can hold, and even turn this into support, or whether there could be a pullback on the cards. Bearish sentiment is certainly subsiding, with the regulatory hurdle putting many off in the past, but whilst analysts price targets are rising, they are not yet keeping pace with the stock.

Recent upgrades in price over the past few weeks from JPMorgan ($46 from $35), Citi ($52 from $37) and Mizuho ($47 from $40), came with Neutral ratings, with JPMorgan highlighting a potential downside due to the “premium valuation”, marking a negative catalyst watch. Stocks are quite capable of trading outside of analyst views of course, and with earnings fast approaching, SMCI could yet have some surprises up it's sleeve.