Move over Nvidia. There's a new hot AI play that has soared 960% in the past year
Nvidia better watch out, at least in terms of stock performance. One high-flying artificial intelligence stock has soared 960% over the past year and may soon become as familiar Nvidia, the dominant, better-known and far larger maker of AI processors. Super Micro Computer was highlighted Thursday at Bank of America by analyst Ruplu Bhattacharya, who began research coverage with a buy rating and $1,040 price target, citing the San Jose, Calif.-based company’s leadership position in the rapidly growing market to create server technology, where it enjoys a critical advantage. “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),” the analyst said. “We believe the market for AI servers is much larger than is factored in Street models.” Recent stock performance notwithstanding, Nvidia, the leading provider of high-end graphics processing units (GPUs) with 80% of the global market, dwarfs Super Micro. Nvidia’s market value Thursday totaled some $1.8 trillion, or about 37 times Super Micro’s $49 billion. SMCI 1Y mountain Super Micro Computer shares over the last year Super Micro popped 13% during Thursday’s session, approaching $1,000 per share. The call from Bank of America comes amid a period of rapid strength for the maker of GPU server systems. Super Micro’s already attracted the attention of the investing community, nearly doubling since reporting strong earnings at the end of January. Shares have more than tripled already this year year after soaring 246% in 2023. Despite the runup in the stock, Bank of America argues that investors may still be overlooking Super Micro’s potential, citing its accumulating backlog and capacity expansion, and partnerships with Nvidia, Advanced Micro Devices and Intel . “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,” Bhattacharya said, referrring to compound annual growth rates. SMCI YTD mountain Year to date stock performance Bank of America’s price target reflected 18% upside from Wednesday’s close and is the highest on Wall Street, according to FactSet. Super Micro already trades far above the consensus analyst price target of $683. Bhattacharya added that Super Micro’s ability to build “server technology from the ground up” gives it a strategic boost. “This allows it to develop the highest performing customized solution for clients,” Bhattacharya said. “That’s a key competitive advantage in our view, as is its ability to quickly incorporate new designs and reduce time-to-market.” — CNBC’s Michael Bloom contributed reporting
