Stock splits are usually good indicators of strength, since companies normally only split their stock after the price of an individual share has gotten expensive. Super Micro Computer‘s (NASDAQ: SMCI) split is coming soon — the company expects its 10-for-1 split to take effect on Oct. 1 — but it hit a rough patch shortly after announcing it.
Since then, the stock is down around 32%. There are a few reasons for this, but I don’t think any of them justify avoiding the stock as a long-term investment — although investors must be aware of the risk they are taking on.
Supermicro’s products are in high demand
Super Micro Computer manufactures components for data centers and builds full servers. This was a good business in recent years, and it has been a phenomenal business lately. Thanks to unprecedented artificial intelligence (AI) demand, companies are rushing to expand their computing…
