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Super Micro Computer (SMCI) is the top-performing computer stock of 2022. It’s gained a staggering 76% so far this year, compared to the S&P 500’s decline of over 20%.
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The San Jose tech hardware provider makes high-performance servers and storage products, for applications in artificial intelligence, 5G and cloud computing. It operates under brand names that include Super Micro, Server Building Block Solutions and We Keep It Green. The product line includes servers, blades, GPU systems, motherboards, chassis, storage and networking systems as well as server management software.
Super Micro stands out as an IBD Sector Leader. Sector Leaders are stocks that have shown exceptionally strong performance compared to their peers.
The Hack That Never Happened?
In 2018, Super Micro’s motherboards were reportedly hacked, allowing China to get a backdoor into U.S. corporate intellectual property. After the Bloomberg exclusive, Apple, Amazon and other companies cut ties with Super Micro. The company suffered an enormous revenue hit when Apple scrapped several thousand Super Micro servers while Amazon sold a Chinese data center.
An independent audit did not reveal any hack through Super Micro’s products. But the company exercised extreme caution and announced plans to move manufacturing out of China. It still disputes government and media allegations.
With that incident fading from memory, this computer stock is clearly poised for strong performance amid its recent entry into the S&P 400 Midcap Index.
Computer Stock’s Perfect Ratings
SMCI stock has perfect 99 IBD Composite, Earnings Per Share, and Relative Strength Ratings.
It ranks first in the Computer-Hardware/Peripherals group, which holds sixth place among IBD’s 197 industry groups. Other stocks in the group include: Logitech (LOGI), Dell (DELL) and HP (HPQ).
Its Accumulation/Distribution Rating of “B+” indicates strong interest in Super Micro from institutional investors. Fund ownership has been rising in the past six months, according to IBD MarketSmith, with 52% of mutual funds now owning shares.
The computer stock joined the S&P 400 Midcap Index on Dec. 22. Shares surged on strong volume ahead of, and after the news. SMCI stock is trading solidly above its 200-day line and appears to be forming support at its 50-day line.
The computer stock broke out of a cup base in strong volume in November and hit a 52-week high, after beating earnings estimates. Sales grew 79% to $1.8 billion while earnings of $3.42 per share showed an astounding 490% growth.
Please follow VRamakrishnan @IBD_VRamakrishnan for more news on growth stocks.
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