Super Micro Computer (SMCI) has given investors a wild ride so far in 2024. Indeed, shares had more than quadrupled for the year to date back in March, but have since whittled this gain to just 60%. Still, this return is outperforms the broader S&P 500 and one analyst thinks there's more upside in store for the artificial intelligence (AI) server, software and infrastructure company in the near future.
Specifically, financial services firm Needham initiated coverage on SMCI with a Buy rating and $600 price target, calling it the "coolest kid in AI town."
Super Micro Computer is a "first mover in the design of GPU-based compute systems and liquid-cooled rack-level solutions," said Needham analyst Quinn Bolton in the report. "We view Super Micro as a significant beneficiary from growing investment in AI infrastructure and forecast a revenue compound annual growth rate (CAGR) in excess of 55% from fiscal year 2021 to fiscal year 2026."
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Bolton adds that the company is "currently involved in the deployment of some of the largest AI clusters in the world and entered fiscal 2025 with record-high backlog."
The analyst also acknowledged SMCI's board of directors is reviewing its internal controls, which it announced late last month, adding that Needham believes "most of this risk may already be reflected in the current share price."
Needham’s $600 price target represents implied upside of more than 33% to current levels.
How do other analysts rate Super Micro Computer stock?
Overall, Wall Street is bullish on the tech stock. According to S&P Global Market Intelligence, the average analyst target price for SMCI stock is $783.67, representing implied upside of over 74% to current levels. Additionally, the consensus recommendation is a Buy.
Financial services firm Argus Research is one of the most bullish outfits on SMCI stock with a Buy rating and $1,000 price target.
"Despite past-year strength in the stock price, valuations for SCMI have not soared out of sight; and recent profit-taking provides an opportunity to establish or dollar-average into positions," said Argus analyst Jim Kelleher in an August 7 note. "The shares have much further to go, in our view, given the company's positioning within transformational AI technology."
As a note to investors, Super Micro Computer will undergo a 10-for-1 stock split on Tuesday, October 1. This means shares will be trading closer to $45 apiece post-split based on their current price around $450.
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