1. Super Micro Computer, Inc. (NASDAQ:SMCI)
Year-to-date Share Price Return as of May 17: 211.05%
Number of Hedge Fund Holders: 40
Super Micro Computer, Inc. (NASDAQ:SMCI) is a California-based developer and manufacturer of high-performance server and storage solutions established on modular and open architecture. The company tops our list of unstoppable growth stocks to buy as its share price grew by 211.05% year-to-date, as of May 17.
On May 1, Barclays raised the price target on Super Micro Computer, Inc. (NASDAQ:SMCI) to $1,000 from $961 and kept an Overweight rating on the shares.
Super Micro Computer, Inc. (NASDAQ:SMCI) was part of 40 funds’ portfolios and the total stake value was $642.911 million in the fourth quarter of 2023. With 446,128 shares worth $126.816 million, Driehaus Capital is the most prominent shareholder in the company, as of December 31, 2023.
ClearBridge Investments stated the following regarding Super Micro Computer, Inc. (NASDAQ:SMCI) in its first quarter 2024 investor letter:
“While large cap benchmarks get a lot of attention for a handful of mega cap stocks driving the lion’s share of performance, we would highlight even more extreme and unprecedented concentration in small cap benchmarks. Year to date, one stock, Super Micro Computer, Inc. (NASDAQ:SMCI) has driven 37% of the return of the benchmark.
Currently, SMCI is the largest constituent by weight in our benchmark, and it peaked at over 4.5%, representing the largest individual security weight in a monthly dataset going back to 1985. That represented a weighting 83% higher than the second-largest weight (from 1999). Moreover, MicroStrategy at its peak this past quarter would have represented the fourth-largest security in the 38 years of the monthly dataset. We are hard-pressed to recall another instance where the largest constituent of our benchmark was also added to the S&P 500, as SMCI was this March. We would note that SMCI currently is a $61 billion market capitalization company and MicroStrategy boasts a market capitalization of $28 billion, both well above the $6.8 billion weighted average market cap of the Strategy.
Enthusiasm for AI and bitcoin have fueled this atypical concentration and performance distortion. Bitcoin rallied fast and furiously following the SEC’s approval of the first bitcoin ETF in early January, while the AI infrastructure build-out has had a narrow set of beneficiaries. Against this backdrop, the ClearBridge Small Cap Growth Strategy underperformed its benchmark. We are disappointed by this result, although 79% of the relative underperformance was due to not owning these two large benchmark holdings, which have fundamental and governance factors that have caused us, as long-term investors focused on quality sustainable growth stories, to avoid them.”
If you are looking for an AI stock that is as promising as Microsoft but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure. None.
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