AI Tailwinds Boost Super Micro Computer Analyst's Bull Case: 'Expect Strong Revenue Growth'

Shares of Super Micro Computer Inc SMCI have rallied over the past month, gaining close to 50%, amid the AI-chip boom.

The company appears well-positioned to benefit from the expanding artificial intelligence (AI) server market and is growing its capacity to support strong demand and revenue growth, according to BofA Securities.

The Super Micro Computer Analyst: Ruplu Bhattacharya reiterated a Buy rating for Super Micro Computer, while raising the price target from $1,040 to $1,280.

The Super Micro Computer Thesis: The AI server market is expected to grow from around $39 billion in 2023 to around $200 billion in 2027, Bhattacharya said in the note.

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“SMCI's competitive advantages include building block architecture which helps to quickly incorporate new technology and reduce time to market, relationship with leading AI CPU/GPU/ASIC providers including Intel INTC, Nvidia NVDA, and AMD AMD, and its ability to customize configurations to specific customer applications and its liquid cooling offerings,” the analyst wrote.

Super Micro Computer has been able to raise cash for working capital and business expansion, “without increasing its annual interest expense related to the offering,” Bhattacharya stated. “We expect SMCI to continue to see strong revenue growth given server demand from applications including Artificial Intelligence (AI), High Performance Computing (HPC), big data analytics, engineering/technical workloads, streaming and content delivery, and compute-intensive graphics and online gaming."

SMCI Price Action: Shares of Super Micro Computer had risen by 0.14% to $1,164.60 at the time of publication on Wednesday.

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