Super Micro Computer SMCI shares soared 9.2% in the last trading session to close at $31.97. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 8.5% loss over the past four weeks.
The optimism surrounding the stock can be attributed to Super Micro Computer’s announcement of $7 billion in equity and equity-linked financing to fund AI server component purchases, fulfill $39 billion of recent AI orders, and support working capital, debt repayment, and capital expenditures.
This server technology company is expected to post quarterly earnings of $0.70 per share in its upcoming report, which represents a year-over-year change of +70.7%. Revenues are expected to be $11.71 billion, up 103.5% from the year-ago quarter.
While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.
For Super Micro, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on SMCI going forward to see if this recent jump can turn into more strength down the road.
The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>
Super Micro is a member of the Zacks Computer- Storage Devices industry. One other stock in the same industry, Teradata TDC, finished the last trading session 0.8% lower at $32.8. TDC has returned 1.1% over the past month.
Teradata's consensus EPS estimate for the upcoming report has changed +6.5% over the past month to $0.55. Compared to the company's year-ago EPS, this represents a change of +17%. Teradata currently boasts a Zacks Rank of #2 (Buy).
Beyond Nvidia: AI's Second Wave Is Here
The AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. AI’s second wave is moving from infrastructure to implementation and these companies are at the forefront of this transition, positioned to become what Amazon and Google were to the internet era.
See Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Super Micro Computer, Inc. (SMCI): Free Stock Analysis Report
Teradata Corporation (TDC): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).