Super Micro Computer Inc.âs monster run was stalling Friday, as its stock looked to snap its longest winning streak in over seven years.
Shares of the server maker had run up nearly 200% in a month, through Thursdayâs close, and had catapulted some 900% on a 12-month basis as well. Wall Street seems excited about Super Microâs
SMCI,
potential to capitalize on the artificial-intelligence frenzy, but Wells Fargoâs Aaron Rakers suggested that this enthusiasm may already be baked into the stock price.
He initiated coverage of Super Micro shares with an equal-weight rating and $960 target price Friday, writing that the stock was already discounting a pathway to upwards of $40 a share in earnings by 2025.
Super Microâs stock was falling about 12% in midday action and on pace to break a nine-session winning streak. That streak was its longest since another nine-session run of gains that ended Aug. 1, 2016, according to Dow Jones Market Data.
See also: Super Microâs stock has surged 900% in a year. Why BofA is making a âbuyâ call.
Rakers cheered the stockâs âAI-fueled fundamental momentum,â which âhas been nothing less than remarkable,â in his view. He attributed the companyâs traction in part to its âengineering-first differentiation,â as the company historically has allocated 40% to 50% of its headcount to research and development roles.
Super Microâs âengineering-first culture appears sustainable, as we see silicon diversity and overall data-center complexity as poised to only increase looking forward,â he wrote.
The companyâs liquid-cooling offerings are proving more critcial given the heavier power requirements for AI workloads. The companyâs âintegration of liquid cooling with its own power supply development is a competitive advantage,â Rakers said.
âWhile liquid cooling deployments today are a very small contribution, [Super Micro] has noted that it sees about 205 of data center customers expressing interesting in the evolution/need for liquid cooling deployments,â he wrote, and the company could see a 10% to 20% boost to average selling prices for liquid-cooled versus air-cooled systems.
Opinion:Â Why Super Micro is mopping up the floor with the competition
