SMCI stock gets a buy rating thanks to AI spending

super microcomputer (SMCI) have more leeway thanks to cloud computing giants splurging on equipping data centers for artificial intelligence, according to a Wall Street analyst. SMCI stock has surged in recent months thanks to its exposure to the AI ​​market.




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Rosenblatt Securities analyst Hans Mosesmann launched coverage of SMCI shares on Tuesday with a Buy rating and a 12-month price target of 300. That would represent a 34% increase from Monday’s closing price. of 223.66. Additionally, year-to-date through Tuesday’s close, SMCI stock is up 184%.

In morning trading in the stock market today, SMCI stock rose 4.5% to 243.52.

The San Jose, Calif.-based server maker, better known as Supermicro, is perfectly positioned to take advantage of the AI-driven spending trend, Mosesmann said in a note to clients.

AI now accounts for nearly 30% of Supermicro’s sales. Meanwhile, sales in this segment are accelerating with increasing one- to two-year visibility, Mosesmann said.

SMCI Stock on IBD Technology Leaders List

Supermicro has competitive advantages through innovations such as large-scale liquid cooling, he said. Plus, cooling technology keeps processors and servers from overheating.

“Large-scale liquid cooling has been quite difficult to deploy given the complexity, expense, and reliability issues (leaks or droplets),” Mosesmann said. “Supermicro’s liquid cooling technology, at scale, can increase rack computing power by more than 2x (twice), which we consider disruptive dynamics in a power constrained data center.”

Supermicro has also invested in hardware security features that help protect sensitive data and applications, he said.

Additionally, Supermicro has collaborated with leading AI processor manufacturers such as Nvidia (NVDA) and AMD (AMD) on their servers and storage systems.

SMCI stock is on the IBD Tech Leaders stock list.

Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.

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