Supermicro (SMCI) Stock Rockets 40% on $20 Billion Saudi Data Center Deal

Super Micro Computer shares have rocketed upward this week, gaining a massive 40% in just a few trading sessions.

Super Micro Computer shares (NASDAQ: SMCI) soared 16% on Wednesday, continuing their massive rally this week as the server maker’s stock price continues to heat up.

The stock closed at $45 after accelerating above its 200-day moving average. SMCI shares have now risen 40% over the past few trading sessions.

The impressive gains come after months of volatility for SMCI. The stock has been on a wild ride following accounting troubles that almost resulted in delisting from the Nasdaq.

Despite these challenges, Supermicro shares have still climbed nearly 50% since the start of the year.

What Happened: SMCI shares have rebounded 63% from their April low. The most recent catalyst for the surge in the stock price came with the announcement of a $20 billion multi-year partnership with Saudi data center giant DataVolt. The deal was announced late Tuesday.

The partnership will see the deployment of GPU platforms and rack systems across hyperscale campuses in the region. The partnership marks a major expansion of Supermicro’s global footprint.

The move also comes as President Donald Trump began a four-day trip to the Middle East. In addition to Supermicro, Nvidia (NASDAQ:NVDA) and AMD (NASDAQ:AMD) announced partnerships with firms in the kingdom.

The partnership also comes with a technical breakout. SMCI shares broke above the upper trendline of a falling wedge pattern on Monday. The stock then accelerated above its 200-day moving average in Tuesday’s session.

The move on Tuesday occurred on the highest trading volume since late February, which could indicate strong buying interest from larger market participants.

The relative strength index is also confirming bullish price momentum. The RSI is approaching overbought levels, which could lead to short-term pullbacks.

Traders are watching the psychological $50 level as the first overhead resistance area. The level also coincides with last August’s swing low and the upper range of an October consolidation period.

If the stock can close above $50, the next target would be around $63. This area matches the August countertrend high and prominent February peak.

For potential retracements, the $35 level could offer initial support. This level aligns with Monday’s breakout point and corresponds to price action stretching back to last October.

Lower support sits around $26, which is near the early-February swing low and could offer an opportunity for longer-term investors.

Related Link: Is Supermicro A Buy After Partnership With Saudi Arabia Is Announced?

Why It Matters: The enthusiasm from Wall Street analysts might also be fueling the rally in Supermicro. Raymond James recently initiated coverage of the company with an Outperform rating and a $41 price target.

The analyst firm called Supermicro a “market leader in AI-optimized infrastructure” with pricing power that compares favorably to peers.

Adding to the bullish case, Supermicro said it had begun shipping high-density servers powered by AMD’s latest EPYC 4005 chips. The move adds to the company’s hardware story in the AI space.

Supermicro shares are also heavily shorted with short interest at 21%. The recent run-up in the stock could be partially related to a short squeeze.

The stock is still down over 50% from its 52-week high.

While the company said its accounting issues have been resolved, auditor BDO issued an adverse opinion on internal controls as of June 2024.

Supermicro (NASDAQ:SMCI) shares are making headlines once again as they continue their remarkable recovery from earlier lows. The server technology provider has secured a massive partnership in Saudi Arabia, marking a significant turning point in the company's trajectory.

Despite being delisted from the Nasdaq earlier this year due to accounting issues and almost forced into bankruptcy, Supermicro has managed to stage a comeback with a new auditor and a focus on the booming artificial intelligence market.

The company's shares have skyrocketed 63% from their April lows, and recently touched a high of $45, showcasing the strong interest from investors.

Supermicro's partnership with Saudi Arabia is a long-term opportunity that could reshape the company's business trajectory and validate its positioning in the competitive AI infrastructure market. As the company navigates this new chapter, investors will be keeping an eye on whether this breakout has staying power or if profit-taking emerges at key resistance levels.