Short Interest in SMCI Overtakes Other Stocks in the S&P 500 Index, Making It the Most Shorted Stock Currently
SMCI Stock: The Short Squeeze Play
In the S&P 500 index, the scientific and technical computing giant, Super Micro Computer (SMCI), has been making waves. An astounding 17.5% of its stock float has been sold short, making it the index's most heavily shorted stock. T3 Live highlighted this in an X post on May 14.
To cover these short positions, data suggests it would take two days, signaling potential trouble for the bearish investors. On the flip side, the recent partnership with Saudi data center firm DataVolt worth a whopping $20 billion has caused SMCI shares, currently priced at $45.17, to skyrocket by a stellar 34.46% over the past week.
The Tide Could Turn for SMCI Stock
Given the significant number of short positions, SMCI could capitalize on the short-squeeze phenomenon. If short sellers are forced to buy to cover their positions, the current rally could escalate further.
However, Super Micro's stock has tested resistance at $37 on two occasions in the post-tariff environment of April and May, but both attempts to move upward failed. The current rally will need the stock to sustain above the $42 to $42.47 range, which has emerged as a resistance area in May.
Bullish Scenario for SMCI
Despite the resistance, there are encouraging signs. Firstly, the tech-heavy NASDAQ-100 index has broken above a crucial moving average, echoing a similar move in April that resulted in the index surging to meet the 1.382 Fibonacci extension. Repeating this trajectory now could propel the stock back to February levels.
Furthermore, trade tensions with China have eased this week, triggering a $2 trillion influx into equities. This broader market recovery could favorably impact SMCI stock.
Lastly, analysts remain optimistic about SMCI. Last week, Raymond James reiterated an 'Outperform' rating and a $41 price target for Super Micro shares, while Loop Capital reaffirmed a 'Buy' rating with a $70 price target, representing the highest Street forecast.
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The Bottom Line:
Although SMCI has faced some challenges, primarily around earnings and short interest, the outlook remains positive. Strategic partnerships, such as the recent $20 billion deal with DataVolt, strengthen its position in AI and technology. With a resurgent tech market, easing trade tensions, and bullish analyst forecasts, Super Micro Computer stock could make a strong recovery.
Investors keeping a close eye on the tech sector might find SMCI an interesting opportunity for investing.
Given the bullish analyst ratings, the recent partnership with DataVolt, and the positive market recovery due to easing trade tensions, Super Micro Computer's stock could potentially benefit from a mix of investing in technology and capitalizing on the short-squeeze phenomenon.
