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Chip stocks on the rise: Is buying in still a smart move?
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Bubble Trouble: Super Micro Computer (SMCI)

Despite fervent attention and 200% growth in the last year, $Super Micro Computer(SMCI.US)$ might need a closer look. Putting aside its past sales to Iran and Chinese spyware, the company is well into its most recent price correction. And it likely has a ways to go before finding its new floor.

For starters, the company’s P/E ratio currently sits at around 47.39x at a price of nearly $840. That’s not cheap in the slightest for a company with a relatively narrow approach to the information technology sector. As a specialized provider of data center technology, SMCI is at the mercy of the rest of the industry continuing to go all in on AI. Should both institutional and retail investors begin to sour on the industry’s prospects, SMCI could continue to dip in price.

Therefore, investors should sell SMCI while its price is still high before buying back into a correct position.
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