Target price of $1500? Super micro computer reveals alarming signals! (2024.04.17)

Hello everyone, in this week's [Technical Tracking], let's analyze a super dark horse stock in the bull market of the US stock market, the AI hardware supplier - Super Micro Computer.$Super Micro Computer(SMCI.US)$.

Hot events

On April 16th (Tuesday), the stock price of Super Micro Computer recorded its largest increase in a month and a half. The stock closed up 10.6% at $976.30, bringing the year-to-date increase to 243%, continuing the strong upward trend of nearly 2.5 times last year!

What contributed to the sharp rise in the stock price of Super Micro Computer was an extremely bullish research report released by Loop Capital analyst Ananda Baruah. It raised the target price of Super Micro Computer from $600 to $1500, an increase of 1.5 times.

The analyst further optimistic about Super Micro Computer's leading position in the AI server market, and expects the company's revenue to reach $30-40 billion and earnings per share to reach $50-60 in 2026. The target price of $1500 is based on the expected PE ratio of 20-30 times.

In fact, as a pioneer in the AI server market, Super Micro Computer has benefited from the surge in AI server sales. The company's revenue in the latest quarter increased by 103%, far surpassing the 14% increase in the previous quarter. Against the backdrop of the AI concept boom, the company's stock has become a hot commodity in the capital market, and this year, the long and short sides have repeatedly staged a fierce battle.

On the one hand, the bears believe that Super Micro Computer has almost no advantage compared to major competitors such as Dell and HP. On the other hand, the bulls believe that Super Micro Computer takes the initiative by entering the AI server market early, which can bring several years of high-speed growth.

The results can only be proven by time...

Technical analysis

Trend analysis:

From the daily chart, it appears that Super Micro Computer's stock price has formed a head and shoulders pattern due to investors' profit-taking. In the medium term, this pattern is considered a somewhat negative signal.

1. Starting from mid-January, Super Micro Computer initiated a strong upward trend, with the stock price soaring over 300% within a month, breaking $1000 for the first time in history, potentially forming the left shoulder position.

2. By mid-February, the stock price retraced 50% of the previous gain within a few days.

3. The stock price climbed again, reaching a new all-time high above $1200, potentially forming the head position.

By mid-March, the stock price retreated for the second time, falling below $900.

The stock price rose for the third time, but failed to reach a new high. At this time, the trading volume had significantly shrunk, forming a potential right shoulder position.

Over the next three weeks or so, the stock price continued to decline.

Indicator interpretation:

• Before the 10.6% surge on April 16th, the stock price of Super Micro Computer fell below the 50-day moving average (MA50). This was a situation that had not occurred in the past three months, suggesting a potential weakening trend.

• There was a clear shrinkage in trading volume, with the volume at the head and right shoulder much lower than the left shoulder, indicating a continued weakening of market trading willingness.

• Since mid-February, when the stock price first surpassed $1000 (left shoulder position), some momentum oscillators have been showing a downward trend, notably the KDJ indicator.

• In the past month and a half, the stock price has shown a convergence pattern, fluctuating between two converging trendlines, indicating a potential upside or downside breakout in the near term.

Focus direction:

On the one hand, due to the sudden appearance of a large positive candlestick on April 16th, the stock price of Super Micro Computer closed at a two-week high, with a certain short-term bullish sentiment support.

On the other hand, considering the possible head and shoulders pattern on the daily chart, it also means that the stock price may weaken further in the medium term.

This content discusses technical analysis. Other methods, including fundamental analysis, may provide different perspectives. The examples provided are for illustrative purposes only and do not reflect expected results.

All investment involves risk, including the potential loss of principal, and no investment strategy can guarantee success.

Multiple companies are about to release earnings reports, and many mooers are actively trading during the earnings call period, resulting in a recurring effect of making money!

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