Pullback, shmullback.
Sure, Nvidia‘s (NASDAQ: NVDA) share price has retreated somewhat in recent days. But that doesn’t negate the fact that the chip stock has soared 154.9% year to date. Nvidia remains a huge winner for investors.
It’s not the biggest winner in the S&P 500, though. Meet the one S&P 500 stock that’s outperforming Nvidia so far in 2024.
The lone Nvidia beater
Only three stocks in the S&P 500 have delivered gains of 100% or more this year. Nvidia is still ahead of one of them. Vistra‘s return of 132.2% isn’t quite up to Nvidia’s level. However, Nvidia is way behind the S&P 500’s best-performing stock.
Super Micro Computer‘s (NASDAQ: SMCI) shares have skyrocketed 196.6% so far in 2024. Its gain was even more impressive earlier this year. Super Micro stock was up a jaw-dropping 318% year to date in mid-March.
The IT solutions provider isn’t just enjoying a great year; it’s had a fantastic decade. Ten years ago, Super Micro Computer’s market cap was less than $1.2 billion. It reported revenue of $1.16 billion in the previous fiscal year with a profit of only $21.3 million.
Today, Super Micro Computer’s market cap tops $49.3 billion. Wall Street expects the company to generate revenue of nearly $15 billion in its fiscal year ending June 30.
What put the “super” in Super Micro Computer this year
Why is Super Micro Computer stock performing so well in 2024? In large part, for the same reason it soared 246% last year: surging demand for servers and storage systems driven by artificial intelligence (AI).
Super Micro’s success has gone hand-in-hand with Nvidia’s. In its latest quarter, the company saw record demand for its AI rack scale direct liquid cooling (DLC) systems, including those running Nvidia’s H100 graphics processing units (GPUs). Super Micro was the first to market development for Nvidia’s GH200 (Grace Hopper) and GB200 (Blackwell) platforms.
It also helped that Super Micro Computer was added to the S&P 500 index in March. As a result, all mutual funds and exchange-traded funds (ETFs) that track the S&P 500 had to buy shares of Super Micro.
There has been only one development that has weighed on Super Micro’s soaring share price. On March 19, the company announced a public stock offering of 2 million shares. Although it’s not surprising that Super Micro took advantage of its tremendous share price gains to raise money, the move diluted the value of existing shares.
Is Super Micro Computer stock still a smart pick?
The AI boom shows no signs of slowing down anytime soon. Nvidia’s executives disclosed that the demand for its forthcoming Blackwell GPUs is through the roof — a great sign for Super Micro.
So is Super Micro Computer stock still a smart pick after its sizzling gains? Valuation could become a problem if the demand for AI systems slows. Cautious investors will probably be better off looking elsewhere.
However, Super Micro’s forward earnings multiple around 26 isn’t too steep considering the company’s growth prospects over the next few years. Aggressive investors with long-term perspectives could still profit from the S&P 500’s top stock of 2024 so far.
Should you invest $1,000 in Super Micro Computer right now?
Before you buy stock in Super Micro Computer, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Super Micro Computer wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $723,729!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
*Stock Advisor returns as of June 24, 2024
Keith Speights has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.
Meet the 1 S&P 500 Stock That’s Outperforming Nvidia So Far in 2024 was originally published by The Motley Fool
