Investing.com — Super Micro Computer (NASDAQ:)'s stock price is gaining considerable momentum, thanks in no small part to the growing influence of artificial intelligence. The question is whether that momentum will continue in the near future.
SMCI stock price
Supermicrocomputer's stock price fell 20% on Friday, but this only tells a small part of the company's history over the past 12 months, with the company still up a massive 744% after Friday's drop. There is.
SMCI stock is benefiting from the continued rise in demand for AI. However, some analysts are questioning whether the stock price is in a bubble.
Based on Friday's closing price, SMCI stock is up 176% since the beginning of the year.
What does a super microcomputer do?
SMCI is an information technology company that designs, develops, manufactures, and sells server, storage, networking, and computing systems. The company is known for its energy-efficient, high-density servers and offers a wide range of products and services for a variety of applications.
The company is deeply involved in the AI industry and plays a key role in providing the hardware and software infrastructure that drives AI development and deployment. SMCI's stock price rally has been fueled by surging demand for the company's high-performance rack servers for AI applications.
SMCI stock price forecast
Rosenblatt analyst Hans Mosesmann this week raised his price target on SMCI from $700 to $1,300 and maintained a “buy” rating on the stock. Analysts cited the continued momentum in AI computing that they observed during recent visits to Silicon Valley and the United Kingdom.
“The key to this story is for investors to consider that the company not only benefits from long-term growth in AI (more than 50% CAGR over the next few years), but also from significant share gains.” the analyst wrote in a memo.
“We expect these gains to reach double digits over the next few years, from mid-single digits today, with a particular focus on enterprise,” he added. Mosesmann notes that a key aspect of the growth trajectory is the adoption of liquid cooling technology.
“Liquid cooling is one of the next major hurdles for AI at scale, as traditional Asian ODMs and traditional server OEMs are not looking to quickly and diversely deploy compute rack-level SKUs. “We think this will be a major catalyst for hyperscale efforts,” he said, “in the midst of chaotic AI momentum.”
Meanwhile, BofA recognized SMCI as a “leading company in a fast-growing market.” The bank has a “buy” rating on the stock and a starting price target of $1,040.
“We believe this provider of server and storage solutions will benefit from AI-driven demand growth,” the bank said.
“We believe the market for AI servers is much larger than the Street model takes into account. (5.5% CAGR over the past 17 years), we expect Super Micro's revenue to grow even faster and drive market share expansion.”
Wells Fargo took a more neutral stance on the stock in a recent note, initiating an equal weight rating and $960 per share price target on SMCI. The bank said that while AI momentum will continue, SMCI stock is already off solid upside.
Is SMCI a good stock to buy?
When evaluating whether a stock is a buy, you need to consider a variety of factors, including the current share price spike and future prospects.
For example, BofA believes Super Micro's backlog is increasing and it is expanding capacity to support strong revenue growth.
“The company has established itself as an early launch partner for CPU and GPU accelerators for companies such as Nvidia (NASDAQ:), AMD (NASDAQ:), and Intel (NASDAQ:),” they added. “We believe its ability to accommodate multiple new designs and technologies will benefit the myriad of AI-related processors that will emerge in the coming years.
Is SMCI stock in a bubble?
Even though stock prices are rising rapidly, it's difficult to tell if we're in a bubble. Rosenblatt's Moses Mann, speaking directly to Investing.com, said SMCI stock “certainly has the potential for a bubble, but it's too early for the AI cycle.”
A key part of SMCI's outlook lies in “non-traditional customers (CSPs and hyperscalers),” he added. “Why should he go to Supermicro when these players have other sources?”
Overall, of the 17 Wall Street analysts covering the stock, 9 have rated SMCI with a buy rating, 7 have given it a neutral rating and 1 has given it a sell rating. . Rosenblatt has a maximum price target of $1,300 per share.
Learn more about AI stocks
Want to evaluate the performance of other AI stocks? Our dedicated page provides a comprehensive list of alternative AI companies across a variety of industries and technologies. Evaluate the performance of popular AI stocks including NVIDIA (Learn more: What is NVIDIA?)
If you're interested in a diversified approach to investing in AI, consider looking into AI ETFs, which offer a basket of companies involved in artificial intelligence technology. Our page provides information on various AI ETFs and allows you to evaluate their performance alongside individual AI stocks.
