Can Super Mini Stocks Help You Become a Millionaire?

Supercomputer, Inc. (NASDAQ resonance code: SMCI)Arguably one of the most surprising successes of the Artificial Intelligence (AI) stock boom so far. The server maker has been quiet for decades, but has managed to expand its business to more than 100 countries.

However, as customers seek hardware for running AI applications, with theNvidia ) of the carpet has fueled demand for its servers. As a result, the company's share price has risen by more than 2000% over the past three years.

With these returns, an investor who has held the stock for three or more years could become a millionaire, even with a relatively small initial investment. What is less clear is whether small investors can expect to become millionaires from now on.

The State of the Art of the Supermicro

SuperMicro has been around since 1993. The company is committed to its role as a rackmount turnkey IT solutions provider, manufacturing energy-efficient and environmentally friendly servers for its customers.

Since its inception, the company has become an innovator in the server industry. The company also expanded steadily, launching operations in Asia and Europe in the 1990s. This expansion led to an initial public offering (IPO) in 2007. However, from the 2007 IPO to the end of 2021, the company's stock price rose less than 400%.

However, over the course of the decade, its servers have become increasingly popular, and a sudden interest in generative AI has sent its stock price soaring.

The bull market for these investments may not end anytime soon, as Allied Market Research forecasts that the AI chip industry will grow at a compound annual growth rate (CAGR) of 38% by 2028, so even if the growth slows down after 2028, Supermicro could still become an even bigger industrial center for ruggedness in a few years' time.

Finance and Indicators of Supermicro

We can see this trend in the rise of Supermicro's stock. A $10,000 investment three years ago is now worth just under $240,000. In other words, it has more than quadrupled in value in that time. Based on this value, the stock would only need to more than double again to reach $1 million. Thus, a long-term holder of Super Micro shares can become a millionaire, even if he starts small.

However, those who buy now may need to take a larger position. Here's why.

Three years ago, Supermicro's market capitalization was only about US$2 billion; now it has reached US$52 billion. An investment of US$10,000 at today's prices would have to raise the market capitalization to US$5.2 billion.Trillions of dollarsIt is the only way to reach the $1 million investment.

Needless to say, such a level of market capitalization would require much more industry growth. Nvidia, the name partner of Supermicro, leads the industry with a market capitalization of about 2.25 trillion dollars, about 43 times that of Supermicro.

While both companies will continue to grow over the long term, it will take almost unimaginable growth to boost Supermicro's market capitalization to $5.2 trillion or more.

Investing in Supermicro

Today's small investors are unlikely to become millionaires from Super Micro stock. In fact, the company has experienced tremendous growth with Nvidia.

However, the recent growth has put SuperMicro's market capitalization among the big rock stocks, and for that amount of money it is less than 3% of Nvidia's current capitalization. And, in terms of that increase, it's less than 3% of Nvidia's current ratio, which investors shouldn't expect since SuperMicro would have to grow to more than 2.4 times Nvidia's ratio in order to make a small investor a millionaire.

However, that doesn't necessarily mean investors should give up on Supermicro stock. Considering the popularity of artificial intelligence and the industry's expected growth, investors can still get substantially richer in Supermicro no matter where they start.

Should you invest $1,000 in a supercomputer company right now?

Consider the following before buying shares of Supercomputer, Inc:

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Will Healy does not own any of these stocks. the Motley Fool holds a recommendation for Nvidia. the Motley Fool has a disclosure policy.

Can Super Microcap Stocks Help You Become a Millionaire? This post was originally published by The Motley Fool.