Jim Cramer’s Top 10 Hottest Stock Picks

7. Super Micro Computer Inc. (NASDAQ:SMCI)

Number of Hedge Fund Holders: 47

JPMorgan downgraded Super Micro Computer Inc. (NASDAQ:SMCI) from a “buy” to a “hold” rating, citing concerns following the allegations made by Hindenburg Research. The analysts believe it’s not worth fighting against these claims. As a result, JPMorgan significantly lowered its price target for the AI server company, reducing it from $950 to $500 per share, reflecting Super Micro Computer Inc. (NASDAQ:SMCI)’s sharp decline. Jim Cramer pointed out that the downgrade reflects the major impact of the allegations on what was once a high-performing stock.

“JPMorgan downgraded Super Micro Computer to a hold-equivalent rating from a buy. The analysts said it’s not worth battling after the Hindenburg Research allegations. JPMorgan made a catch-up cut on its price target for the AI server company, going to $500 per share from $950 to reflect the break down of this once-high flying stock.”

Super Micro Computer Inc. (NASDAQ:SMCI) presents a strong investment case due to its impressive financial results, promising growth forecasts, and potential for significant stock appreciation, despite recent volatility and concerns from short-sellers. For fiscal year 2024, Super Micro Computer Inc. (NASDAQ:SMCI) reported remarkable growth, with net sales rising to $14.9 billion from $7.1 billion the previous year and net income increasing by over 82% to $352.7 million.

This growth is driven by Super Micro Computer Inc. (NASDAQ:SMCI)’s expanding role in data center and AI server solutions, which are in high demand. Analysts expect Super Micro Computer Inc. (NASDAQ:SMCI) to continue growing, with a projected annual revenue increase of 47.5% and a 48.2% rise in earnings per share over the next year. Currently trading around $386, the stock is seen as undervalued, with price targets suggesting potential gains of up to 100%. Although a recent short-seller report caused a temporary drop in the stock price, Super Micro Computer Inc. (NASDAQ:SMCI)’s adherence to GAAP standards and its shift to upfront revenue recognition due to subscription services might make the dip a good buying opportunity.

Polen U.S. Small Company Growth Strategy stated the following regarding Super Micro Computer, Inc. (NASDAQ:SMCI) in its Q2 2024 investor letter:

“The second largest contributor to the Portfolio’s relative performance was Super Micro Computer, Inc. (NASDAQ:SMCI), a provider of high- performance, energy-efficient servers, which the Portfolio does not own. The stock declined notably in the quarter, providing a tailwind to relative performance. On a YTD basis, however, Super Micro is still our largest relative detractor, given its robust 1Q return.”