We recently compiled a list of the 10 Stocks Set to Explode in 2025. In this article, we are going to take a look at where Super Micro Computer, Inc. (NASDAQ:SMCI) stands against the other stocks set to explode in 2025.
“Big Technology are The New Defensives” Strategist Says
As the Magnificent Seven continues to release earnings for the fiscal third quarter of 2024, investors are keen to see if the group can maintain their market leading position and exemplary performance. On October 25, Nancy Tengler, Laffer Tengler Investments CEO & Chief Investment Officer, appeared in an interview on Yahoo Finance to share her market thesis on big tech amid current market conditions.
Tengler suggests that names in big technology boast reliable earnings growth, fitting the basic criteria of such. She adds that she would much rather own big tech names than invest in traditional defensive stocks despite a sluggish economic backdrop. Tengler reiterates her bullish stance on the sector claiming that big technology names are the new defensive and hold much stronger positions in the market.
READ ALSO: 10 Oversold Tech Stocks To Buy Right Now and 8 Unstoppable Stocks That Could Make You Richer.
She emphasized that these names have large cash flow reserves, oftentimes, bigger than most countries. Tengler highlights that she is not bullish on all of the names in the magnificent seven and stresses that she has expanded her exposure to the tech sector, adding new stocks to her portfolio. However, at the same time, there are several names within the magnificent seven that cannot be ignored or argued against. She also suggests that investors must seek to invest and own a select few among the group, instead of owning all of them.
She shares that she was previously pessimistic about certain names she held and emphasized that she will focus on margins for certain stocks among the Mag Seven moving forward. Tengler also adds that while these companies have been criticized for pouring billions into capital expenditures, certain names are expected to benefit immensely from AI monetization and their unique cloud services and products.
While many characteristics define exploding stocks, some key traits involve an expanding customer base, improving monetization of offerings, increasing cash flows, and strong fundamentals. Biotech, electric vehicles, artificial intelligence, and cloud are among the few high-growth markets expected to blow up in the coming years. Within these sectors, certain names have been performing exceptionally well in the current market rally and are expected to outperform in 2025.
Our Methodology
To come up with 10 stocks set to explode in 2025, we consulted financial media to shortlist stocks that are expected to perform exceptionally well according to analysts and strategists. After consulting 10 similar rankings on the internet we examined the Street-High upside for each stock and picked the ones with the highest upside, as of October 27, 2024. Our list is in ascending order of the street high upside as of October 27, 2024. We have also mentioned the hedge fund sentiment for each stock.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
High angle view of a semiconductor chip against an array of electronics components.
Super Micro Computer, Inc. (NASDAQ:SMCI)
Street High Upside as of October 25, 2024: 175%
Number of Hedge Fund Holders: 47
Super Micro Computer, Inc. (NASDAQ:SMCI) is an information technology company based in California, United States. The company provides computing, storage, networking, and green computing technology solutions. It specializes in developing enterprise, cloud, AI, Metaverse, and 5G Telco/Edge infrastructure.
With operations in more than 100 countries, Super Micro Computer, Inc. (NASDAQ:SMCI) ranks second on our list of stocks set to explode in 2025. The company is thriving in the server segment. A few weeks ago, SMCI introduced high-performance Intel-based servers for AI, Cloud, and Edge. Earlier in June, Super Micro Computer, Inc. (NASDAQ:SMCI) added 3 new manufacturing facilities in Silicon Valley and globally to support the accelerating demand for AI and Enterprise solutions.
According to the company’s CEO, the new servers will help SMCI develop customized solutions for their clients. To expand its position in the industry, on October 15, Super Micro Computer (NASDAQ:SMCI) launched a new optimized storage solution for high-performance AI training, inference, and HPC workloads. The system uses data processing units from NVIDIA, serving as the foundation for AI data platforms that demand top-notch performance and efficacy.
In the fiscal year 2024, Super Micro Computer, Inc. (NASDAQ:SMCI) logged $14.94 billion in revenue, up by 110% year-over-year, driven by its new AI infrastructure. Note that the company’s FQ4 2024 revenue alone exceeded the revenue for the complete fiscal year 2022. Analysts are also bullish on the stock and their high price target represents an upside of 175% from current levels.
Overall, SMCI ranks 2nd among the 10 stocks set to explode in 2025. While we acknowledge the potential of SMCI as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than SMCI 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. This article is originally published at Insider Monkey.