The Super Micro Computer (SMCI) stock price has had a roller coaster this year. It initially surged to a high of $122 in March this year, up by over 345% from its lowest point in January. It then erased most of those gains and dropped to the current $32.2. Its market cap has crashed from over $66 billion to the current $19.1 billion.
SMCI stock price forecast
The daily chart shows that the Super Micro Computer share price has been in a strong bearish trend in the past few months. It has formed a descending channel shown in red. The current price is a few points below the upper side of this channel.
The SMCI share price has also crashed below the 50-day Exponential Moving Average (EMA). Most notably, the stock has moved to the key support at $31.78, the highest swing in March and December last year.
The stock has continued to form a series of lower lows and lower highs, a sign that bears are in control. It has also moved to the weak, stop, and reverse point of the Murrey Math Lines tool.
Therefore, the short-term outlook for the stock is bearish, with the next point to watch being the oversold level of the Murrey Math Lines. That drop implies a 40% crash below the current level. Losing that resistance will see it crash to the extreme oversold point at $12.5.
On the flip side, more gains will be confirmed if the SMCI share price rises above the bottom of the trading range level at $43.75. This price coincides with the upper side of the falling channel, a move that will see it rise to $88.65, the extreme overshoot level, which is about 178% above the current level.
Read more: Supermicro can’t seem to pull itself together: here’s why it lost 12% again
Super Micro Computer is a growing company with challenges
The SMCI stock jumped initially because of its substantial growth metrics as data center spending rose. This was a notable thing because the company sells products that are used widely in areas like enterprise, cloud, artificial intelligence, and telecom.
Supermicro sells products like rackmount servers, GPU servers, twin servers, blade servers, and storage servers that are used around the world.
Servers have been in high demand as companies position themselves for the artificial intelligence era. As a result, its financial results have been strong, with its quarterly revenues being higher than what it made annually a few years ago.
The most recent results showed that Super Micro Computer made over $5.3 billion in the fourth quarter of fiscal 2024. That was a big number considering that it made $3.85 billion in the same period a year earlier.
In a recent statement, the company said that it will make between $5.3 billion and $6 billion in the fourth quarter. While these are solid numbers, they were much lower than the previous guidance of between $6 billion and $7 billion.
The main concern for the SMCI stock is that its short interest has risen to 15%, a sign that many investors anticipate the stock to crash. The other main issue is that there are signs that AI spending will start to slow next year, and the company is seeing a wave of client exodus.
Recent numbers showed that AI spending has been dominated by giant companies like Microsoft, Meta Platforms, Google, and Amazon. They have done that in a bid to position themselves for the future of AI.
However, there are signs that this spending will start to slow as AI adoption rates remain relatively low. Analysts have mixed opinions about the SMCI stock, with JPMorgan, Barclays, and CFRA downgrading the company. Mizuho, Needham, and Loop Capital have a neutral rating. The average SMCI stock forecast is $40, higher than the current $32.
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