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​​​​​Super Micro Computers soars as it joins the S&P 500

​​Super Micro Computer (SMCI) stock closed up more than 18% on Monday after the company was selected to join the S&P 500.​

Chart Source: Bloomberg

​​​SMCI joins the big boys

Super Micro Computer, a manufacturer of high-performance computing solutions, received a significant boost as its shares soared following the announcement of its inclusion in the S&P 500 index. The company's stock closed the trading day with a remarkable gain of over 18%, reflecting investor confidence and the recognition of Super Micro's position as a prominent player in the technology sector.

​Super Micro shares are now up 278% this year after climbing 246% in 2023 and 87% in 2022, which was the worst year for tech stocks broadly since 2008.

​The inclusion in the S&P 500 caps an extraordinary rally for Super Micro's stock. Despite 2022 being a challenging year for the tech industry, with it being the worst year for tech stocks broadly since the 2008 financial crisis, Super Micro defied the odds and delivered an impressive 87% gain. Building on this momentum, the company's shares have continued their upward trajectory, surging a staggering 246% in 2023 and a further 278% so far this year, making it one of the standout performers in the technology sector.

​The company's market cap has soared from close to $4.5 billion at the end of 2022 to roughly $60 billion at Monday's close.

​The remarkable performance of Super Micro's stock has translated into a substantial increase in the company's market capitalisation. From a relatively modest market cap of around $4.5 billion at the end of 2022, Super Micro has experienced a meteoric rise, with its market capitalisation skyrocketing to approximately $60 billion as of Monday's market close.

​What is the criteria for inclusion in the S&P 500?

​The S&P 500 is a stock market index that tracks the performance of 500 large-cap U.S. publicly traded companies. Here are the main criteria for a company to be included in the S&P 500 index:

  • ​Market capitalisation: The company must have a market capitalisation that is large enough to be in compliance with the market cap ranges for the specific index (currently $14.5 billion)
  • ​Public gloat: The company must have a public float of at least 10% of its shares outstanding.
  • ​Financial viability: The company must have positive as-reported earnings over the most recent quarter and the most recent four quarters, combined.
  • ​Adequate liquidity and reasonable Price: The ratio of annual dollar value traded to float-adjusted market capitalisation should be at least 1.0, and the stock should trade at a reasonable price.
  • ​Sector representation: The company should be representative of a sector covered by the S&P 500.
  • ​Domicile: The company must be based in the U.S. and traded on an eligible U.S. stock exchange.
  • ​Trading period: The company should have an operating history of at least one year.

​The inclusion criteria are designed to ensure that the S&P 500 represents the leading companies in the U.S. economy and provides a broad representation of the U.S. equity market. Companies are added or removed from the index periodically based on meeting these criteria.

​SMCI stock price – technical analysis

​The SMCI share price, which has already risen by over 275% year-to-date, once more gapped higher on Monday and hit a new record high at $1,155.

​Unless this high is exceeded, in which case the $1,200 region would be eyed next, ahead of the minor psychological $1,500 mark, Monday’s $1,020.34 to $927 price gap is expected to at least partially get filled.

​A similar price gap between the 21 and 22 February also got partially filled before the surge to Monday’s all-time high took place, something which is expected to happen once more this week as some investors cash in their profits.

SMCI daily chart Source: TradingView
SMCI daily chart Source: TradingView

​While the January-to-March uptrend line at $846.52 holds, the medium-term uptrend will remain intact.

​For a bearish reversal to be seen, a fall through the late-February low at $692.50 would need to ensue. Such a drop in itself would represent a 35% fall in the SMCI share price from Monday’s close.

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer.

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