Shares of Super Micro Computer (SMCI) are expected to remain in the spotlight at the start of the week after the stock led the S&P 500 higher on Friday, buoyed by positive remarks from analysts.
JPMorgan upgraded the server maker, highlighting that increasing demand for AI infrastructure could boost Supermicro’s stock, particularly as its hardware, which houses Nvidia’s (NVDA) sought-after Blackwell chips, benefits from rising shipments. The stock has surged nearly 40% since the beginning of the year, as investors have looked beyond challenges related to accounting and corporate governance issues that have plagued the company over the past six months.
Positive Outlook Despite Past Challenges
Supermicro’s recent success has come despite a series of setbacks. Last month, the company filed delayed financial reports to avoid being delisted from Nasdaq and forecast significant revenue growth by 2026, driven by increasing demand for AI infrastructure.
The upbeat outlook from analysts and the company’s strong recovery have helped bolster investor confidence in the stock, with shares finishing last week nearly 8% higher at $42.15.
Technical Outlook: Inverse Head and Shoulders Pattern
From a technical perspective, Supermicro shares have been in a strong uptrend, having formed an inverse head and shoulders pattern between August 2023 and February 2024. The stock broke out above the neckline of this formation on strong trading volume last month, signaling a potential for further gains. A recent pullback to this breakout level has attracted renewed buying interest, pushing the Relative Strength Index (RSI) back above the neutral 50 threshold, which could set the stage for another move higher.
Key Support Levels to Watch
Investors will want to watch key support levels closely as the stock continues its recovery. The first major support level is around $35, which aligns with the neckline of the inverse head and shoulders pattern and the prominent peak seen in August 2023. If the stock breaks below this level, the next significant support could be at $26, which coincides with the low from last month and the upward-sloping 200-week moving average. This level is also reinforced by several price points from the second half of 2023, suggesting it could be a key buying opportunity.
As Super Micro Computer continues to benefit from the growing demand for AI infrastructure, its stock’s technical setup and analyst optimism suggest that investors may see more upside in the coming months—provided key support levels hold steady.
