Why This Stock, Why Now
Super Micro Computer (SMCI) jumped to the top of the AI Leaderboard this week — ranking among the fastest-growing AI query momentum stocks over the past 7 days. Investors are suddenly obsessed, and for good reason: this stock has moved like lightning.
The reason may be that this week, the narrative shifted: Goldman Sachs slapped a rare “Sell” rating on the stock, triggering an echo across the financial media. The downgrade landed just as SMCI was testing a key level after a failed breakout.
The mainstream saw warning lights.
Lee Adler sees something worth watching.
Wall Street Narrative
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“Super Micro is the unsung king of AI infrastructure.”
Investors are calling SMCI the backbone of the AI revolution — the one stock actually shipping the servers everyone else relies on. -
“This is the most explosive growth story in AI hardware.”
With triple-digit revenue growth and tailwinds from NVIDIA’s ecosystem, bulls see no ceiling in sight. -
“Super Micro will eat Dell and HPE’s lunch.”
Some think SMCI’s custom server business makes it untouchable — leaner, faster, and smarter than the incumbents.
That’s the hype. Now here’s what the chart says.
Just the Facts, Ma’am
Super Micro (SMCI) is being heralded as the unsung hero of AI infrastructure. As the demand for AI processing power skyrockets, SMCI’s custom servers have become a critical piece of the puzzle. The company’s specialized hardware is tailored for the AI revolution, positioning them squarely in the spotlight.
The growth story is real — triple-digit revenue increases have become the norm, largely driven by the surge in AI adoption across industries. Professional investors have taken note of the company’s ability to capitalize on this wave, and partnerships with key players like NVIDIA make SMCI an even more attractive prospect. With NVIDIA providing the most powerful GPUs on the market, SMCI’s servers are the natural hardware complement for anyone scaling AI capabilities.
But while SMCI stands to gain in a booming sector, it’s not without its challenges. The competition is fierce, and while the company is certainly gaining traction, Dell and HPE, two giants of the server market, are not sitting idle. Their massive resources and established market presence mean SMCI cannot afford to rest on its laurels.
For some investors, SMCI’s rapid growth paints a clear picture: the AI infrastructure space is not only large, but it’s still in the early innings. The belief is that SMCI, as a leaner, more agile player, can eventually outpace larger incumbents, carving out its own space in this high-demand market.
However, others are more skeptical. Even with all the tailwinds of the AI revolution, the market will test SMCI’s ability to maintain its competitive advantage and its profitability as it scales. While its hardware is highly regarded, it’s still a battle to win share from entrenched competitors, who may respond with innovations of their own.
As the story unfolds, professional investors are weighing the long-term growth potential of SMCI against the short-term pressures of market competition and rising costs. The coming months will show whether the company can keep delivering on its promises — or whether the giants of the industry will reclaim the throne.
VERDICT: MOSTLY REJECT THE MAINSTREAM NARRATIVE.
Goldman may have got this one right — rare, but it happens. But when they issue a rare Sell, it’s worth asking: Are they more interested in accumulating the stock at a lower price than avoiding it?
Goldman is a market maker in hundreds of stocks, so that alone isn’t conclusive. But when a Sell rating coincides with a clean technical test and price begins to hold support at key levels, it’s time to start watching for potential accumulation, even if the tape doesn’t immediately show it.
Structurally, the weekly chart (below) still leans bearish. If price fails to hold the 25–30 range, expect further downside. But the daily chart (below) is starting to tell a different story. If price begins to firm up around support, showing modest new lows and attempts to rebound, this could signal the start of stealth accumulation beneath the surface.
If this turns out to be a trap for weak hands, Goldman’s desk will remain silent, but the price action will reveal the verdict.
The Wave Charts
The weekly chart (below) shows a textbook blowoff followed by a technical breakdown. SMCI’s parabolic move into March 2024 exhausted itself and reversed hard. The recent bounce off the January low has now failed at the underside of the broken trend structure and rolled over beneath declining wave slopes.
The Cycle Wave Composite™ confirms it:
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Price Action line (smoothed) has downticked in negative territory- bearish.
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Green (short-term MA) is flattening in negative territory, not yet bullish.
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Red (intermediate MA) has flattened at a deeply negative level, not yet bullish .
From this lens, the bounce was noise — not a new trend. The path of least resistance remains lower until something shifts.
But zoom in, and the daily chart (below) complicates the picture.
Despite the March 24 Goldman downgrade, SMCI has held above its prior January lows, and is now hovering near a rising envelope line around the 30 level. If the next leg down fails to break meaningfully below 25–30, this could begin to look like a base-in-progress — marked by bidirectional swings and diminishing downside energy. This would square with Goldman accumulating inventory following the sell call.
It’s too early to call it. But the structure is there to watch closely.
Chart 1: SMCI Weekly – Breakdown in Progress
SMCI’s vertical run broke every constraint in early 2023. Since then, price has unraveled below the trend structure. Wave slopes are declining across all timeframes, and the current bounce is failing beneath a declining intermediate wave.
Chart 2: SMCI Daily – Accumulation or Trap?
Daily structure shows price reacting to the March 24 downgrade — but still holding above key support near 30. If this zone holds, the pattern may resolve into a choppy base rather than a continuation break. Wave slope alignment is weakening but not yet collapsing.
If you’re ready to understand the deeper technical undercurrents driving SMCI’s price action and the AI infrastructure trend, don’t wait for the market to tell you. Get ahead with Lee Adler’s unique, cutting edge, proprietary Cycle Wave Analytics insights.
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