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Super Micro Computer Continues to Make My Top Stock Pick for 2024 Look Super

Second-quarter guidance and AI demand send the shares skyward.
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New year, new me.

Someone tell that to the market. Small-caps continue to hide in the shadow of big-cap tech.. Despite the huge fourth-quarter move higher in the Russell 2000, last year wasn't a banner year for smaller companies. Until the fourth quarter, the Russell 2000 looked poised for a down year, but some alpha-chasing combined with the end of Fed interest rate hikes saved the index, as noted here on Friday by Real Money Pro's Helene Meisler. 

However, it seems people are realizing that the Fed won't be lowering rates in the near future, nor will those cuts likely be as frequent as the market anticipated back in the fourth quarter. That likelihood will keep the pressure on smaller companies during the first quarter of 2024 and possibly into the second quarter. On the private side, it will keep the cost of capital elevated and might slow everything non-AI related in the initial public offering (IPO) market.

After last night's bell, Super Micro Computer (SMCI) , my 2024 stock pick of the year, announced preliminary second-quarter results. Artificial intelligence continues to propel customer demand for SMCI's solutions.

Super Micro Computer increased sales guidance to a range of $3.6 billion to $3.65 billion, up from a prior range of $2.7 billion to $2.9 billion. Earnings per share estimates previously ranged from $4.40 to $4.88. Management increased that range while also tightening it. The company now expects earnings to range from $5.40 to $5.55 per share.

Super Micro Computer shares jumped around 6% after hours on Thursday, which put the stock back to its opening print from Thursday morning, and they have continued to climb in premarket trading Friday morning. I still view $350 as the major hurdle for bulls, but pullbacks in the $290 to $310 range may continue to offer an entry opportunity for those who missed the December dips. I continue to like this company and the stock on a fundamental basis and the technical setup. Seeing a takeover offer on SMCI before the year concludes would not surprise me.

At the time of publication, Byrne had no positions in the stocks mentioned,