In a report released today, Ruplu Bhattacharya from Bank of America Securities reiterated a Buy rating on Super Micro Computer (SMCI – Research Report), with a price target of $1,280.00.
Ruplu Bhattacharya has given his Buy rating due to a combination of factors, including Super Micro Computer Inc.’s (SMCI) solid position in the rapidly expanding artificial intelligence (AI) server market. This growth is underpinned by the semiconductor analyst team’s revised projections, which anticipate the AI server industry’s revenue to surge from approximately $39 billion to around $200 billion between 2023 and 2027. Bhattacharya recognizes SMCI’s unique advantages, such as its building block architecture that facilitates swift integration of new technologies, reducing the product’s time to market. He also emphasizes the company’s strategic relationships with leading AI CPU/GPU/ASIC providers, including Intel, Nvidia, and AMD, and its capability to tailor configurations to specific customer needs, enhanced by its liquid cooling offerings.
Furthermore, Bhattacharya highlights SMCI’s financial strategy, noting the pricing of convertible senior notes due in 2029, which has provided the company with necessary cash for working capital and expansion without increasing annual interest expenses. This financial maneuver is designed to support SMCI’s robust revenue growth, fueled by server demand across various applications such as AI, High Performance Computing (HPC), big data analytics, and more. Despite noting certain risks like GPU availability, competitive pricing pressures, and potential gross margin declines, Bhattacharya remains bullish on SMCI’s future revenue and earnings potential. His revenue and EPS estimates for the company significantly exceed the Street’s estimates, and he has confidently raised the price objective to $1,280, reflecting his belief in the company’s capacity for future growth and medium-term earnings power.
In another report released on March 6, Argus Research also initiated coverage with a Buy rating on the stock with a $1,350.00 price target.
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Super Micro Computer (SMCI) Company Description:
Super Micro Computer, Inc. manufactures servers and other computer products. The firm’s products include twin solutions, MP servers, GPU and coprocessor, MicroCloud, networking, embedded, gaming, AMD solutions, power supplies, SuperServer, storage, motherboards, chassis, super workstations, accessories, SuperRack, and server management. The company was founded by Charles Liang, Yih-Shyan Liaw and Chiu-Chu Liu Liang in September 1993 and is headquartered in San Jose, CA.
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