Supermicro to replace Walgreens in Nasdaq 100: ‘SMCI is an adjacency to NVDA’

Super Micro Computer Inc (NASDAQ: SMCI) will replace Walgreens Boots Alliance Inc (NASDAQ: WBA) in the Nasdaq 100 on July 22^nd, as per a press release on Monday.

The Nasdaq 100 is an index comprising the largest 100 nonfinancial companies in the Nasdaq Composite.

Supermicro stock is still down about 2.0% on Monday.

Why is Walgreens losing its spot in Nasdaq 100?

Nasdaq 100 requires member companies to maintain a minimum weighting of 0.1% of its market value that currently sits at over $20 trillion.

Walgreens is losing its spot in the Nasdaq 100 as its stock has crashed more than 50% this year that has pushed its market cap down to just $10 billion or roughly 0.05% of the index’s market value.

WBA tumbled particularly sharply last month after coming in shy of Street estimates for its third financial quarter and lowering its adjusted EPS guidance for fiscal 2024.  

Why is Supermicro stock being added to Nasdaq 100?

Supermicro is slated to replace Walgreens in the Nasdaq 100 as continued focus on artificial intelligence has helped its shares rally significantly in 2024.

A more than 200% year-to-date gain in SMCI has pushed market cap of the AI server company over $52 billion or more than 0.25% of the Nasdaq 100 value.

Despite the news that it will replace Walgreens in the aforementioned index, shares of Super Micro Computer Inc are slightly in the red at writing – a price action that famed investor Jim Cramer doesn’t find justified.

It’s [SMCI] an adjacency to Nvidia, what can I say. Added to Nasdaq 100. It should be up, it shouldn’t be down.

What to expect from SMCI Q4 earnings report?

Supermicro is scheduled to report its financial results for the fourth quarter in mid-August. Consensus is for it to earn $7.63 a share – up sharply from $3.43 only that it earned on a per-share basis a year ago.

The expected adjusted EPS would mean a significant sequential growth as well considering SMCI earned $6.65 on a per-share basis in its fiscal Q3. Charles Liang – the chief executive of Super Micro Computer said at the time:

Strong demand for AI rack scale PnP solutions, along with our team’s ability to develop innovative DLC designs, enabled us to expand our market leadership in AI infrastructure.

Supermicro expects $14.7 billion to $15.1 billion in revenue this year versus analysts at $14.6 billion. Wall Street currently has a consensus “overweight” rating on SMCI and sees upside in it to $1,061 on average that suggests potential for a close to 20% gain from here.

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