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data center system provider super microcomputer (NASDAQ:SMCI) Lately, he has become a darling on Wall Street. The company’s stock price has soared 950% in the past year and has been on a parabolic trajectory lately.
Although its stock has tripled in the last month alone, one Wall Street analyst believes the company known as Supermicro still has room to run. american bank Securities analyst Ruplu Bhattacharya initiated coverage on the supplier of accelerated computing server systems with a buy rating and price target of $1,040. This represents an 18% increase compared to Wednesday’s closing price, despite Supermicro’s ferocious share price rise.
AI has legs
Companies in virtually every sector are leveraging the power of artificial intelligence (AI).The biggest beneficiaries of the stock market so far have been semiconductor chip makers. Nvidia. In the company’s third quarter, overall revenue more than tripled from a year ago and was up 34% quarter-over-quarter. The jump was largely due to growth in his Nvidia data center business as customers clamored for chips to power his AI applications.
But companies don’t just need chips, they also need the server infrastructure to keep full AI machines running. Also, while Nvidia’s revenue tripled year over year, its earnings per share soared more than 12 times. Mr. Bhattacharya believes that this earning power will lead to Super Micro’s growth.
“We believe this provider of server and storage solutions will benefit from AI-driven demand growth…The market for AI servers is much larger than considered,” he said in a note to clients. I think it will be a big deal.” [Wall] street model. ”
Is it too late to buy a Supermicro?
Mr. Bhattacharya’s price target may even be conservative. If the AI server market grows at 50% annually over the next few years, as Bhattacharya believes, Supermicro’s revenue and profit growth will be even stronger.
However, the stock price is still not that expensive. The price-to-sales ratio is about 6 compared to Nvidia’s 40. And like Nvidia, profits could soar. Analysts’ claims seem quite possible.
Should you invest $1,000 in a super micro computer right now?
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Bank of America is an advertising partner of The Motley Fool’s Ascent. Howard Smith has a position at his Nvidia. The Motley Fool has a position in Bank of America and Nvidia and recommends Bank of America and Nvidia. The Motley Fool recommends Super Micro Computers. The Motley Fool has a disclosure policy.
1 Wall Street analysts believe that Supermicrocomputer’s stock price will be $1,040. Is it a buy?Originally published by The Motley Fool
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