How Nvidia's Earnings Are Impacting Super Micro Computer's Shares

In the wake of NVIDIA Corp‘s NVDA recent earnings report, Super Micro Computer Inc SMCI shares have been fluctuating. Analysts have weighed in on the future of the stock.

What Happened: Super Micro Computer, a provider of AI systems and GPU servers, saw its shares rise significantly earlier this year, reaching a year-high in mid-March. However, the stock has been volatile since then, with significant drops in late April and early May. Following Nvidia’s strong earnings report, SMCI shares experienced further turbulence.

Despite this, the stock is still up by an impressive 210% year-to-date. Analysts at Bank of America believe that Super Micro is well-positioned to benefit from the growing demand for AI-related accelerated computing, particularly from “tier 2” cloud service companies, according to a CNBC report.

"Only 1% of datacenters today use liquid cooling, but Supermicro management expects that percentage to grow to 20% in the next 12-18 months," BofA noted. "We see Supermicro as having a competitive advantage in providing liquid cooling at scale." They have maintained a buy rating for the company, with a price target of $1,090, representing a potential 23% increase.

Paul Meeks, co-chief investment officer at Harvest Portfolio Management, expressed his continued support for the stock, stating that he would consider buying more if the share price dropped to between $700 to $750.

JPMorgan also holds an overweight rating on Super Micro, emphasizing the company’s strong position in the early stages of the AI investment cycle.

According to FactSet, analysts maintain a consensus price target of $1,059.03 for the stock, indicating an average potential upside of 19.8%.

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Why It Matters: Earlier in May, Super Micro Computer announced its S&P 500 status, which it plans to use for debt financing. The company also predicted AI breakthroughs in medicine and weather forecasting.

Meanwhile, Nvidia’s inclusion in the Dow Jones index is seen as a matter of when, with the company’s growth, story, and price all aligning for this move.

On the technical side, there’s speculation about whether Super Micro will follow Nvidia’s lead with a stock split after Nvidia’s recent split announcement.

Additionally, the success of Nvidia has led to significant financial gains for its CEO, Jensen Huang, who is now reportedly richer than each Walmart heir. This further underscores the strength of Nvidia’s position in the market and its potential impact on its partners like Super Micro.

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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote