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.
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What does Super Micro's stock split mean for existing shareholders?
Super Micro Computer stock is currently trading around $415, 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 $41.50 apiece.
However, "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. 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 more than 23% 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.
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