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
-
USPS Is Raising Prices for Holiday Shipping: Dates and Increases You Need to KnowWhat the USPS's $16 price hike means for your wallet and your small business.
-
July CPI Report Ignites a Risk-On Rally: Stock Market TodayMarket participants price out worst-case scenarios for tariffs and inflation and will now turn their attention to employment and growth.
-
July CPI Report Ignites a Risk-On Rally: Stock Market Today
Market participants price out worst-case scenarios for tariffs and inflation and will now turn their attention to employment and growth.
-
July CPI Report Boosts Rate-Cut Odds: What the Experts SayThe July CPI report shows that tariffs are having a slight impact on inflation, though not enough to keep the Fed from cutting interest rates.
-
DST Exit Strategies: An Expert Guide to What Happens When the Trust SellsUnderstanding the endgame: How Delaware statutory trust dispositions work, what investors can expect and why the exit is probably more important than the entrance.
-
Think Selling Your Home 'As Is' Means You'll Have No Worries? Think AgainThere are significant risks and legal obligations involved in selling a home 'as is' and by yourself, without a real estate agent.
-
Stocks Slip Ahead of July CPI Report: Stock Market TodayThe latest inflation updates roll in this week and Wall Street is watching to see how much of an impact tariffs are having on cost pressures.
-
What the OBBB Means for Social Security Taxes and Your Retirement: A Wealth Adviser's GuideFor Americans in lower- and middle-income tax brackets, the enhanced deduction for older people reduces taxable income, shielding most of their Social Security benefits from being taxed.
-
Financial Planner vs Investment Manager: Who's the Better Value for You?When markets are shaky, who do you trust with your money? A recent study provides useful insights into the value that different financial professionals offer.
-
I'm a Financial Adviser: This Is How You Could Be Leaving Six Figures in Social Security on the TableClaiming Social Security is about more than filing paperwork and expecting a check. When you do it and how you do it have huge financial implications that last the rest of your life.
