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With expectations for strong growth in the artificial intelligence (AI) server market, super microcomputer (NASDAQ:SMCI) It’s up 176% year-to-date and 755% over the past 12 months. The stock briefly reached a high of $1,077 last week, but has since fallen back.
But despite its significant rise in value, some Wall Street analysts still see room for further upside.
Rosenblatt Securities analyst Hans Mosesmann recently raised his price target on the stock from $700 to $1,300 (the highest price on the market). The new target is a 65% increase from the super microcomputer’s Tuesday closing price.
As always with these Wall Street calls, long-term investors should be concerned about the reasoning behind the call, not the price target.
Why Wall Street Loves Supermicrocomputers
Rosenblatt bases his call on the strong tailwinds in AI, which is expected to grow at an average annual rate of 50% over the next few years. Analysts believe that Super Micro is gaining significant market share and that the company has already achieved that goal. The company attributed last quarter’s 103% year-over-year sales increase to strong demand and market share growth for its plug-and-play rack systems.
Are Super Micro stocks worth buying?
Super Micro Computer operates in the competitive market for server systems. Some investors might argue that. Nvidia The company is a good stock to buy, as strong demand for its graphics processing units (GPUs) is believed to have driven some of Supermicro’s demand last quarter.
Still, Super Micro is emerging as the go-to supplier of rack computing platforms designed for AI. The company’s forward price-to-earnings ratio of 36 times is roughly half of the company’s recent earnings growth rate, and could support further earnings if demand for AI continues at this pace.
Should you invest $1,000 in a super micro computer right now?
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John Ballard has a position at Nvidia. The Motley Fool has a position in and recommends Nvidia. The Motley Fool recommends Super Micro Computers. The Motley Fool has a disclosure policy.
Will supermicrocomputer’s stock price reach $1,300? 1 Wall Street analysts think so.Originally published by The Motley Fool
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