Is it too late to buy shares of Super Micro Computer Inc., which have surged about 180% over the past month and rocketed some 900% over the past 12 months?
Not according to BofA Securities analyst Ruplu Bhattacharya, who initiated coverage of the server makerâs stock with a buy rating and $1,040 price objective. He said Super Microâs
SMCI,
potential may not be fully appreciated by investors.
âWe believe the market for AI servers is much larger than is factored in Street models,â Bhattacharya wrote in his Thursday report. Whereas the server market historically has grown at a 5.5% annual clip over the past 17 years, it could start growing at a 50% compound annual growth rate on average for the next three years, in his view.
Super Micro, meanwhile, stands to see its revenue growth even faster than that 50% rate since the company could pick up market share, he continued.
The company âhas established itself as an early launch partner for companies like Nvidia, AMD and Intel for CPUs and GPU accelerators,â Bhattacharya noted, and Super Microâs âability to work with multiple new designs and technologies will serve it well as myriad AI-related processors debut in the next several years,â in his view.
Opinion:Â Why Super Micro is mopping up the floor with the competition
Super Microâs liquid-cooling products are critical for the artificial-intelligence era because processors that heat up too much can see throttling, according to Bhattacharya. The company also helps clients reduce their operating expenditures in part because they can lower their air-conditioning costs, he added.
Bhattacharya also cheered the companyâs expertise in building server technology âfrom the ground up,â a strategy that he said is a competitive differentiator as Super Micro can adapt quickly to new products and customize offerings to meet a customerâs needs.
âSuper Microâs competitive advantage is that it can take almost any chip architecture and put that into an energy efficient, optimized server platform and scale it into a rack and put the necessary software on top of it,â he wrote. âAssuming availability of components, within just a few weeks Super Micro can manufacture, assemble, test, validate and ship a rack to make it plug and play for the customer.â
Super Micro shares were up more than 7% in Thursday morning action. His $1,040 price objective implied 18% upside from Wednesdayâs close and about 9% upside from current levels.
See also: Super Micro board member buys over $1 million in stock after 600% yearly surge
