Super Micro Computer (NASDAQ:SMCI) has been initiated with a Buy rating at BofA Global Research, with a price target of $1,040.
Shares popped 5% in premarket trading.
“We think this provider of server and storage solutions will be a beneficiary of AI-driven demand growth (>50% of revenues now tied to accelerators like GPUs),” analysts said in a Thursday note.
“We believe the market for AI servers is much larger than is factored in Street models. We expect the market for AI servers to grow, on average, 50% CAGR over the next three years, vs. historical growth of the overall server market (5.5% CAGR over the past 17 years), and we expect Super Micro’s revenue to grow even faster driving market share gain,” they added.
The company has an increasing backlog and is enhancing its capacity to accommodate robust revenue expansion, BofA noted, and has also positioned itself as a key early launch collaborator with leading firms such as Nvidia, AMD, and Intel for CPUs and GPU accelerators.
The analysts believe Super Micro's capability to adapt to various new designs and technologies positions it favorably for the upcoming wave of AI-related processors expected to emerge over the next few years.
“Given our view, our revenue and EPS estimates are well above Street,” they said.