Super Micro Computer (SMCI) jumped out of the gate in 2024 and rallied hard in the first few months. Indeed, the stock was up more than 300% for the year to date back in mid-March but it has since pared these gains to about 46% amid a series of fundamental woes.
Still, a big event is on the immediate horizon that has implications for investors. SMCI is scheduled to undergo a 10-for-1 stock split next week and will start trading on a split-adjusted basis at the open on Tuesday, October 1.
A stock split is similar to making change. So in the case of SMCI, it means investors will receive 10 shares for every one they own and the share price will be adjusted accordingly. While a split makes a stock more accessible to retail investors because it lowers the share price, it does not change the underlying fundamentals of the company.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
What does Super Micro's stock split mean for existing shareholders?
Super Micro Computer stock closed September 30 at $416.51, so if you own 100 shares, your brokerage account will show on Tuesday morning that you now possess 1,000 shares at a split-adjusted price of $41.65 apiece.
"It's debatable what the immediate impact for [existing shareholders] will be," writes Kiplinger contributor Charles Lewis Sizemore, CFA, in his feature on what is a stock split.
"Often, the buzz surrounding a stock split causes the price to rise leading up to the split and then in the trading days immediately following," he adds. "But the data here is mixed and certainly not conclusive enough to suggest buying a stock simply because it’s planning a split or has recently done a stock split."
Recent woes for SMCI shareholders
While the upcoming stock split is notable, it's not the main thing on most investors' minds these days when it comes to the AI stock.
For one, Super Micro is currently being investigated by the U.S. Department of Justice following a report by short-selling firm Hindenburg Research. The probe is in the early stages and includes concerns over potential accounting manipulation, according to The Wall Street Journal.
SMCI stock is down nearly 24% since Hindenburg's report was released on August 27. One day later, Super Micro announced a delay to its fiscal 2024 annual report.
Is Super Micro stock a buy, sell or hold?
Even with Super Micro Computer's recent troubles on and off the price charts, shares are still outperforming the broader S&P 500 for the year to date. And Wall Street thinks the tech stock has much more room to run.
According to S&P Global Market Intelligence, the average analyst target price for SMCI stock is $750.33, representing implied upside of over 80% to current levels. Additionally, the consensus recommendation is a Buy.
Financial services firm Needham is one of those with a Buy rating on SMCI stock, along with a $600 price target.
"As a first mover in the design of GPU-based compute systems and liquid-cooled rack level solutions, we view Super Micro as a significant beneficiary from growing investment in AI infrastructure and forecast a revenue compound annual growth rate (CAGR) in excess of 55% from fiscal 2021 to fiscal 2026," said Needham analyst Quinn Bolton in a September 18 note.
"Super Micro is currently involved in the deployment of some of the largest AI clusters in the world and entered fiscal 2025 with record high backlog," he added.
Related Content
-
ESPN to Acquire NFL Network and RedZone in Exchange for 10% Equity StakeESPN will take control of NFL Network and RedZone, while the NFL secures a 10% stake in ESPN — a move that could change how fans watch football.
-
Stocks Rally on Apple Strength: Stock Market TodayThe iPhone maker will boost its U.S. investment by $100 billion, which sent the Dow Jones stock soaring.
-
Stocks Rally on Apple Strength: Stock Market Today
The iPhone maker will boost its U.S. investment by $100 billion, which sent the Dow Jones stock soaring.
-
What to Know About Multisector ETFsMultisector bond funds allow investors to pick and choose among a wide array of assets.
-
I'm an Estate Planning Attorney: These Are the Two Legal Documents Everyone Should HaveEvery adult should have a health care proxy and power of attorney — they save loved ones time, money and stress if a sudden illness or injury leaves you incapacitated.
-
I'm a Financial Professional: Here's My Investing Playbook for Political UncertaintyFor successful long-term investing in a politically charged environment, investors should focus on economic data, have a diversified portfolio and resist reacting to daily headlines.
-
Rally Pauses for Hot Earnings, Cool Data: Stock Market TodayMarkets were mostly mixed Tuesday after decisive moves Friday and Monday.
-
The Truth About the Dark Side of Rooftop Solar PanelsRampant bankruptcies in the solar panel industry have left many consumers with systems that don't work and no way to get them fixed. Worse, they're being hounded to keep paying despite not receiving what they were promised. What can they do?
-
Six Big Beautiful Opportunities: Advisers' Guide to Tax and Client StrategiesHere are several ways financial professionals can help their clients maximize opportunities in the One Big Beautiful Bill Act, which extends key TCJA provisions, introduces increased deductions for people 65 and older and more.
-
Dow Rises 585 Points on Rate Cut Hope: Stock Market TodayStocks moved more than 1% again Monday, this time to the upside following the Jobs Friday sell-off.
