Super Micro Computer(US:SMCI) The Motley Foolยท2024-09-01 09:02Core Viewpoint - Super Micro Computer (Supermicro) is set to initiate a 10-for-1 stock split on September 30, 2023, following a significant increase in stock value, raising questions about whether it is a good investment opportunity before the split [1][2]. Financial Performance - In the fiscal 2024 fourth quarter, Supermicro reported record revenue of $5.31 billion, a 143% increase year over year and a 38% increase quarter over quarter [7]. - Adjusted earnings per share (EPS) rose 78% to $6.25, although profit margins were impacted due to a shortage of specific server components, resulting in $800 million in sales being deferred to the next quarter [7][8]. Market Position and Growth Potential - Supermicro is experiencing growth in the AI server market, with projections indicating an increase in market share from 10% in 2023 to 17% by 2026, with some analysts forecasting as high as 23% for this year [9]. - Over the past five years, Supermicro's revenue has surged by 564%, and net income has increased by 1,240%, leading to a stock price increase of 2,750%, significantly outperforming the S&P 500's 89% gain during the same period [15]. Stock Split and Historical Context - This will be the first stock split in Supermicro's 17 years as a public company, and historical data suggests that companies that split their shares tend to deliver total returns of 25% in the year following the split, compared to 12% for the S&P 500 [4][3]. Recent Challenges - Supermicro faced scrutiny from a short report by Hindenburg Research, alleging accounting irregularities and other issues, but analysts from JPMorgan have noted that the report lacks substantial evidence and maintain a buy rating with a $950 price target [10][11]. Industry Outlook - The generative AI market is projected to contribute between $2.6 trillion and $4.4 trillion to the global economy over the next decade, indicating strong potential for continued growth in the sector [14].