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super microcomputer (NASDAQ:SMCI) has performed incredibly well over the last year and has garnered a lot of attention on Wall Street. on monday, goldman sachs Analysts have published a note initiating coverage on Supermicro. The investment firm assigned a “neutral” rating to the stock, indicating that it does not recommend buying or selling the stock at this time.
Goldman analysts also have a one-year price target for the stock of $941 per share. The artificial intelligence (AI) stock’s stock price is around $1,140 per share, meaning it could fall 17% over the next year. Have supermicro stocks become too risky?
Can Supermicro stock continue to rise, or is it time to sell?
In Goldman’s note on Supermicro, analysts note that it makes sense for the server specialist’s valuation to rise significantly. Analysts pointed to the company’s strength in the high-performance server market and its status as an “AI winner” with valuable business relationships as legitimate catalysts for the phenomenal stock price rise. Supermicro stock has risen more than 1,000% in the past year.
Meanwhile, Goldman currently believes that most of the short-term growth drivers are already priced into the stock. Given that the supermicrocomputer’s stock trades at about 52 times this year’s expected earnings, the stock may be poised for some volatility in the short term. Of course, even if Goldman’s team is exactly right in its price predictions, the stock could continue to perform well over the long term.
Explosive profits have pushed supermicro stocks to more speculative valuation levels, but the outlook for the business is evolving in a very favorable direction. We do not recommend selling your stocks right now.
For investors with a high risk tolerance, I think there can still be significant returns from taking a buy-and-hold approach to stocks. However, investors should take a balanced approach when building a portfolio of AI stocks and avoid betting too much on any one stock or investing large sums of money at once. This is especially true if the valuation has increased significantly.
Should you invest $1,000 in a super micro computer right now?
Before buying Super Micro Computer stock, consider the following:
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Keith Noonan has no position in any stocks mentioned. The Motley Fool has no position in any stocks mentioned. The Motley Fool has a disclosure policy.
1 Wall Street analysts think Supermicrocomputer stock will reach $941. Will it sell around $1,140?Originally published by The Motley Fool
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