The shares of the IT infrastructure company Super Micro remain among the most sought-after stocks in the market, particularly in the field of Artificial Intelligence (AI). Following a strong performance, the investment bank Needham has included the server specialist's stock in their evaluation and set an ambitious price target.
Super Micro, considered a pioneer in the development of GPU-based computer systems and liquid-cooled rack-level solutions, significantly benefits from increasing investments in AI infrastructures according to Needham. Analysts predict an average annual revenue growth of more than 55 percent until 2026. The company's order books are well-filled, indicating robust demand for its products. Therefore, Super Micro is "the coolest kid in AI town," says Needham.
However, the analysts are more cautious regarding gross margins. While they clearly see growth opportunities, the margins are estimated more conservatively than projected by Super Micro itself. Nevertheless, the expectations that the margins could fall into the single-digit range are considered 'overly negative.'
The last few months have been turbulent for Super Micro shareholders. Accusations from short-seller Hindenburg Research, including allegations of balance sheet manipulations and violations of US sanctions, significantly impacted the stock. Additionally, the postponed release of the annual report and ongoing margin pressure concerns led to a 52 percent decrease in share price over the past three months.
Nonetheless, Needham sees these risks as already priced into the stock and remains optimistic. The analysts' target price is $600, representing an upside potential of more than 37 percent. This places Needham among the more optimistic analysts, with Rosenblatt remaining the most bullish with a target price of $1,300.
Despite recent uncertainties, Super Micro remains in demand on the stock markets. The stock experienced another volatile trading day on Wednesday and closed on the NASDAQ with a slight loss of 0.57 percent at $436.93. However, in after-hours trading, it gained more than one percent to $441.30.
