Super Micro Computer (NASDAQ:SMCI) had quite the ride in 2024, which certainly began with a bang. The company shares started off white-hot to kick off the year, rocketing up over 300% in the first few months.
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Things cooled considerably afterwards, and the latter half of 2024 was full of setbacks, embarrassment, and sinking share prices. Among other negative developments, SMCI was hit by allegations of financial improprieties, a public break-up with its previous auditor, and a missed 10-K filing. All told, SMCI shares are only up about 6% for the year, far below the Nasdaq-100 on which it used to sit.
However, with 2025 knocking on the door, one top investor known by the pseudonym The Asian Investor thinks that prospects will begin looking up for SMCI.
“Super Micro Computer’s demand drivers are intact and with the market set to keep growing in the years ahead, I believe SMCI will continue to do well financially, especially in the market for liquid-cooled server racks,” writes the 5-star investor, who sits in the top 3% of TipRanks’ stock pros.
The Asian Investor explains that the Data Center market is expected to continue growing in the years to come, which will propel demand for SMCI’s liquid-cooling solutions. The investor cites one report that projects demand for liquid-cooling to increase at a rate of 60% average annual growth through FY 2027.
“AI products are seeing rapid product uptake in the high-performance computing segment, which is not coincidentally one of SMCI’s largest markets,” adds the investor.
Notable risks for SMCI, according to The Asian Investor, are remaining listed on the Nasdaq and improving its gross margins. While not out of the woods yet with the Nasdaq, the presence of a new auditor gives the investor more confidence that SMCI will succeed in remaining listed on the exchange.
Though the investor notes that SMCI’s gross margins are much lower than other AI-centric firms, The Asian Investor takes some solace from the company’s impressive year-over-year revenue growth of 143% in Q4 2024.
“If Super Micro Computer can positively improve its gross margins in its core business in FY 2025 as well and secure a continual Nasdaq listing, I believe the company has a very good chance to achieve an upside revaluation in 2025,” concludes the investor, who rates SMCI a Buy. (To watch The Asian Investor’s track record, click here)
Wall Street is also moderately optimistic that 2025 will be a better year overall for SMCI. With 2 Buy, 5 Hold, and 2 Sell ratings, SMCI holds a Hold (i.e. Neutral) consensus rating. However, its 12-month average price target of $38.57 would translate into gains of ~28%, indicating a fair amount of hope that things will indeed be on the up-and-up for SMCI in the year to come. (See SMCI stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
