AMD surged again today – is it time for artificial intelligence stocks to show their strength?

super microcomputer (NASDAQ: SMCI) The stock price plummeted again on Monday. According to data, the company’s stock price closed up 4.4% that day. S&P Global Market IntelligenceEarlier in the session, the stock was up 9.4%.

Northland Capital Markets issued a bullish update on Super Micro ahead of the open this morning. Analyst Nehal Chokshi maintained an “outperform” rating on the stock in a report and raised the company’s one-year target price to $925 per share from $625 per share. With shares of the server specialist trading at about $773 a share at today’s close, hitting Chokshi’s target would mean a gain of about 20% over the next 12 months.

Are Hot Artificial Intelligence Stocks Worth Buying Now?

Supermicro is a provider of high-performance servers and storage solutions that has seen demand for its technology surge with the rise of artificial intelligence (AI).

In the second quarter of the fiscal year ended December 31, AMD’s revenue more than doubled year-on-year to $3.66 billion. Non-GAAP (Adjusted) earnings per share were $5.59, an increase of 71.5% from the same period last year. The acceleration in rapid growth has pushed the stock up 759% from last year.

SMCI Price to Earnings Ratio (Forward) Chart

SMCI Price to Earnings Ratio (Forward) Chart

Super Micro currently trades at about 35.6 times this year’s expected earnings. Jumping ahead to the next fiscal year, analysts on average expect the company to post earnings of $27 per share – which works out to a forward P/E ratio of 28.6.

With the recent share price rally, the company’s valuation has become more growth-dependent, but that’s not necessarily unwarranted. As artificial intelligence takes off, AMD is winning business in important technology areas.

Granted, it’s difficult to accurately predict the company’s long-term business trajectory, but the recent surge in demand for Super Micro’s high-performance rack-scale servers is a promising sign. While new competitors may enter the space over time, the company’s turf or some key customers will shift to in-house developed solutions, the business is rapidly gaining market share in what appears to be a major technological inflection point.

If you’re worried that the excitement around artificial intelligence will taper off in the near term, or that emerging tech trends will soon be subject to cyclical swings, this stock may not be a good fit. Likewise, if the company’s price-to-earnings ratio looks too high given some uncertainty about the long-term demand outlook, it may make sense to stay on the sidelines.

But for risk-tolerant investors looking for long-term growth in artificial intelligence, AMD stock still holds promise at current levels.

Should you invest $1,000 in a Super Micro Computer right now?

Before buying Super Micro Computer stock, consider the following factors:

this Motley Fool Stock Advisor The analytics team has just identified what they believe is 10 Best Stocks Investors can buy right now… and AMD isn’t one of them. The 10 stocks selected could generate huge returns in the coming years.

stock advisor Provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. stock advisor The service has more than tripled the S&P 500’s returns since 2002*.

View 10 stocks

*Stock Advisor returns as of February 12, 2024

Keith Noonan Does not hold any of the above stocks. The Motley Fool recommends Super Micro Computer. Motley Fool has disclosure policy.

AMD surged again today – is it time for artificial intelligence stocks to show their strength? Originally published by The Motley Fool

Source link

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button