Super Micro Computer: Why This AI Stock Could Hit $600
Super Micro's first-mover advantage could make it a significant beneficiary to growing AI investments, Needham says. Here's what investors need to know.
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."
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
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.
Related Content
- Best AI Stocks to Buy: Smart Artificial Intelligence Investments
- Analysts' Top S&P 500 Stocks to Buy Now
- Pricey Super Micro Computer Stock Pops on S&P 500 Inclusion
-
Tax Season 2026 Is Here: 8 Big Tax Changes to Know Before You FileTax Tips Due to several major tax rule changes, your 2025 return might feel unfamiliar even if your income looks the same.
-
The New Rules of RetirementPopular guidelines about how to save, invest and spend need to be updated and personalized to ensure you'll never run out of money.
-
Humanoid Robots Are About to be Put to the TestThe Kiplinger Letter Robot makers are in a full-on sprint to take over factories, warehouses and homes, but lofty visions of rapid adoption are outpacing the technology’s reality.
-
A Value Focus Clips Returns for This Mairs & Power Growth FundRough years for UnitedHealth and Fiserv have weighed on returns for one of our favorite mutual funds.
-
Small-Cap Stocks Gain Momentum. That's Good News for This iShares ETFThe clouds appear to be parting for small-cap stocks, which bodes well for one of our favorite exchange-traded funds.
-
Don't Let a 60/40 Portfolio Derail Your Retirement: Why a Cookie-Cutter Approach Could Cost YouChoosing a personalized retirement investment plan, rather than relying on the 60/40 portfolio, could help protect your savings and ensure long-term growth.
-
Are You Winging Your Retirement Plan? A Wealth Adviser's Tips to Help Build Wealth and Navigate RiskIf you have no strategy tying together your accounts or haven't modeled scenarios to make sure your savings will last, then your plan is probably inefficient.
-
Divide and Conquer: Your Annual Financial Plan Made Easy, Courtesy of a Financial AdviserOverwhelmed by your financial to-do list? Split it into four quarters and assign each one goals that connect to the time of year. It could be life-changing.
-
Nasdaq Leads Ahead of Big Tech Earnings: Stock Market TodayPresident Donald Trump is making markets move based on personal and political as well as financial and economic priorities.
-
11 Stock Picks Beyond the Magnificent 7With my Mag-7-Plus strategy, you can own the mega caps individually or in ETFs and add in some smaller tech stocks to benefit from AI and other innovations.
-
Why ETFs Are One of the Easiest Ways to Start InvestingBroad diversification, low fees and the ability to buy fractional shares make ETFs one of the easiest ways to start investing.
