Shares of Super Micro Computer (SMCI) jumped 15.5% in intraday trading yesterday and ended the day with 9.4% gains, reflecting the growing popularity and solid prospects for its liquid cooling technology. Research firm Lynx Equity upheld its bullish view on SMCI stock and price target of $60, implying 64.6% upside potential from current levels. Lynx Equity cited positive outlook and catalysts from Nvidia’s (NVDA) keynotes at the Consumer Electronics Show (CES) 2025.
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Remarkably, SMCI stock has been on an uptrend since January 3, gaining 21.3% in just two trading sessions. On Friday, tech giant Microsoft (MSFT) announced that it planned to spend $80 billion in the Fiscal year ending June 30 toward developing AI (artificial intelligence) data centers and infrastructure. The news pushed SMCI shares up nearly 11% amid a bullish outlook for the overall AI server market.
A Quick Look at Lynx Equity’s Views
According to the keynote from Nvidia, the semiconductor giant will discuss the GB300 platform, a higher version of the current GB200, and a prime component of SMCI’s servers. The GB300 platform is expected to require more advanced liquid cooling technology akin to the ones that Super Micro Computer specializes in.
Lynx Equity is particularly bullish about SMCI’s dominance in the liquid cooling space, giving it a competitive edge in the market. Robust demand is expected to bolster SMCI’s business, with more and more data centers being outfitted with advanced infrastructure. Furthermore, Lynx Equity also believes that SMCI could benefit from higher demand for liquid cooling tech from AMD’s (AMD) MI325X platform and Alphabet (GOOGL) Google’s TPU6 ramp.
Headwinds Persist for SMCI Stock
Despite the tailwinds, SMCI stock remains under pressure. The company has until February 25, 2025, to publish its Fiscal 2024 annual 10-K filing and Q1 FY25 report with the SEC (Securities and Exchange Commission). Failing which, the stock could be delisted from the Nasdaq stock exchange. Moreover, if SMCI makes any downward revisions to the earlier financials in the annual report, it could disappoint investors, resulting in notable share price drops.
Lynx Equity also mentioned that rumors of SMCI requiring more financing could be a reality since the company needs additional finances for working capital and inventory maintenance owing to the capital-intensive nature of its AI server business.
Is SMCI Stock a Good Buy?
Currently, analysts prefer to remain on the sidelines on Super Micro Computer stock owing to the associated volatility and speculative nature of the stock. On TipRanks, SMCI stock has a Hold consensus rating based on two Buys, five Holds, and two Sell ratings. Also, the average Super Micro Computer price target of $38.57 implies 5.8% upside potential from current levels. In the past year, SMCI shares have gained 13.8%.
