Wed Sep 18 18:37:56 UTC 2024: ## Super Micro Gets a “Buy” Rating from Needham Analyst, Citing AI Growth and Margin Recovery Potential
Needham analyst Quinn Bolton has initiated coverage on Super Micro Computer Inc. (SMCI) with a “Buy” rating and a price target of $600, highlighting the company’s strong position in the rapidly growing artificial intelligence (AI) infrastructure market.
Bolton believes Super Micro stands to benefit significantly from the increasing investment in AI infrastructure, forecasting a revenue compound annual growth rate (CAGR) of over 55% from fiscal 2021 to fiscal 2026. He notes the company’s involvement in deploying some of the world’s largest AI clusters and its record-high backlog entering fiscal 2025.
Despite recent stock price volatility stemming from a short seller report, Bolton maintains a positive outlook. He argues that the stock price already reflects the risk associated with the Board’s internal controls review and dismisses pessimistic margin forecasts, citing Super Micro’s pricing competitiveness in larger liquid-cooled AI deals.
The analyst emphasizes the company’s leadership in rack-level liquid cooling solutions, a key driver of future growth. Super Micro’s aggressive capacity expansion, including its new Malaysia campus, will double its manufacturing capacity in the long term, further supporting its growth trajectory. Bolton forecasts revenue reaching $26 billion to $30 billion in fiscal 2025, representing an 87% year-over-year increase.
Investors interested in gaining exposure to Super Micro can consider the iShares Future AI & Tech ETF (ARTY) and the iShares U.S. Digital Infrastructure and Real Estate ETF (IDGT).
SMCI stock rose 2.30% to $449.41 on Wednesday, reflecting investor confidence in the company’s growth prospects.
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