Super Micro Computer Stock Back on the Rise After Positive News

Fallout from Chinese espionage allegations and COVID-19 pandemic appear to be reversing

Shares of computer and server manufacturer Super Micro Computer (NASDAQ: SMCI) have rebounded sharply in recent weeks, after the company received a pair of positive developments in the midst of a challenging year.

Company releases strong fiscal Q2 report

On November 12, 2020, Super Micro Computer reported better-than-expected second-quarter results. The company reported revenue of $855 million, up 7.6% year-over-year and above the consensus estimate of $842 million. Non-GAAP earnings per share came in at $0.83, also ahead of the consensus estimate of $0.75.

Analysts were particularly encouraged by the company's strong performance in the high-growth hyperscale data center market. Super Micro Computer said that its revenue from this segment increased by 22% year-over-year in the second quarter.

US military drops investigation after four years

In addition, the positive earnings report, Super Micro Computer also received another boost when the US military dropped a four-year investigation into whether the company had installed malicious chips in its servers. The investigation had been a major overhang on the stock and its resolution is a significant positive for the company.

Analysts say that the combination of the strong earnings report and the resolution of the investigation is likely to lead to a continued recovery in Super Micro Computer's stock price. The stock is currently trading at around $25 per share, up from a low of $16 per share in March.