Spurred by surging demand for servers to support artificial intelligence (AI) applications, Super Micro Computer (NASDAQ: SMCI) has become one of the market's hottest stocks. The high-performance server specialist's share price has rocketed nearly 300% higher across 2024's trading alone, and it's up a staggering 1000% over the past year. Most recently, the AI stock surged on news that it is being added to the S&P 500 index.

While the company's business performance has ramped up dramatically, the stock's incredible gains naturally raise valuation questions. Is it too late to buy this explosive AI stock, or is it on track to serve up even bigger wins?

It's no secret that AI stocks are red hot, and Supermicro (as it's commonly known) has benefited from the strong business results at Nvidia. Supermicro uses Nvidia's graphics processing units (GPUs) in its high-performance rack servers, and excitement surrounding the GPU leader has helped lift the server specialist's valuation. But it would be a mistake to dismiss the valuation gains as being purely hype-driven.

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Source Fool.com