Super Micro Computer (NASDAQ:SMCI) appears to have put its regulatory troubles behind it. On February 25, the company successfully submitted its financial reports and announced that NASDAQ had confirmed its compliance, effectively eliminating the risk of delisting. With that hurdle cleared, the focus now shifts to what the AI server maker brings to the table.
Rosenblatt’s Kevin Cassidy, an analyst ranked in the top 3% of Wall Street stock experts, thinks SMCI is benefitting from the growing significance of generative AI, with investors recognizing its “inherent innovation,” design expertise and large-scale manufacturing. The proof is in the AI pudding; AI-related revenues now account for nearly 70% of total sales, and are “accelerating and increasing visibility to 1-2 years.”
The company has created a “formidable business model” that meets the key needs of the AI-driven world, where “time-to-market, TCO optimization, scale, and reliability are of upmost importance.”
And as more businesses adopt edge computing and cloud storage, the need for fast, high-performance processing and energy-efficient server solutions keeps on growing. With its advanced, high-density servers, full rack-scale solutions, and data center tech, Supermicro is “well-positioned to capitalize on this trend.” Its diverse product lineup helps businesses launch faster while reducing overall costs.
Additionally, with increasing cyber threats and data breaches, organizations are focusing on secure and resilient IT infrastructure. Here, Supermicro has invested heavily in security, incorporating hardware-based features to protect sensitive data and applications.
The company’s ability to deliver liquid cooling at scale is also a “competitive advantage.” As CPUs and GPUs become more powerful, they produce more heat, making traditional air-cooling less effective and more energy-intensive. To solve this, liquid cooling – especially using water – is emerging as a better alternative. It offers superior heat dissipation and can reduce operational costs by more than 40%. As high-performance computing (HPC) and AI advance, liquid cooling will be crucial for reducing compute jitter, maximizing efficiency, and supporting next-gen processors.
Yet, scaling liquid cooling has been challenging due to its complexity, high costs, and reliability concerns, such as the risk of leaks or droplets. This is where the company has an advantage. “Supermicro’s liquid cooling technology, at scale, can increase rack compute power by over 2x which we see as a disruptive dynamic in a power constrained data center,” the 5-star analyst went on to say.
Given all the above, Cassidy rates SMCI shares as a Buy, accompanied by a $60 price target. Investors are looking at 12-month returns of ~46%, should the forecast work out as planned. (To watch Cassidy’s track record, click here)
9 other analysts have recently waded in with SMCI reviews and they break down into 4 Buys, Holds and 2 Sells, culminating in a Hold (i.e., Neutral) consensus rating. Going by the $50.50 average price target, a year from now, shares will be changing hands for a ~23% premium. (See SMCI stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
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