Could Super Micro Computer Stock Help You Become a Millionaire?

Super Micro Computer (NASDAQ: SMCI), more commonly known as Supermicro, has likely made enormous profits for investors over the years. The producer of high-performance servers went public at $8 on March 29, 2007, and it now trades at about $423.

A $20,000 investment in Supermicro stock at the time of its IPO would be worth $1.06 million today. The lion’s share of those gains, however, occurred within the past couple of years.

Supermicro’s growth was driven by robust sales of its high-end servers, and those sales have accelerated as the artificial intelligence (AI) market expanded. Its close partnership with Nvidia (NASDAQ: NVDA) also granted it access to the chipmaker’s top-tier server GPUs before Supermicro’s larger competitors, and the company carved out a high-growth niche in the saturated server market.

But even after its massive rally in 2022 and 2023, Supermicro still has a modest enterprise value of $23 billion and looks reasonably valued at 21 times next year’s expected earnings. So could this hot AI stock turn a fresh $20,000 investment into more than $1 million again?

How fast is Supermicro growing?

From its fiscal 2007 through its fiscal 2021 (which ended in June 2021), Supermicro’s revenue grew at a compound annual rate of 16%. That fairly stable growth was driven by the expansion of the cloud, data center, edge computing, 5G, and AI markets.

However, the development of new generative AI platforms lit a fire under Supermicro’s business. The company’s revenue surged by 46% in fiscal 2022 and 37% in fiscal 2023, and analysts expect 61% growth in fiscal 2024.

From fiscal 2023 to fiscal 2026, analysts expect Supermicro’s revenue to rise at a compound annual rate of 26%. That growth should be driven by three catalysts: its partnership with Nvidia, market share gains in AI servers, and the expansion of the generative AI market — which Fortune Business Insights forecasts will grow at a compound annual rate of 48% from 2022 to 2030.

Story…