Why Super Micro Computer Stock Is Rising Monday Morning

Inventory is super microcomputer (NASDAQ: SMCI)Supermicro (Supermicro) continued its strong rise this week, rising 10.3% in early trading on Monday. As of 11:59 this morning, the stock was still up 9.1%.

catalyst for sending Artificial Intelligence (AI) The server maker moved higher on upbeat reports from two Wall Street analysts.

Bullish sentiment strengthens

The first bullish comment comes from JPMorgan Analyst Samik Chatterjee initiated an Overweight (Buy) rating with a price target of $1,150. This suggests a potential upside of 18% compared to Friday’s closing price.

The analyst noted that Supermicro is “the leading company in the artificial intelligence computing market,” and he expects strong demand driven by accelerated adoption of artificial intelligence to continue.

Not to be outdone, Northland analyst Nehal Chokshi raised his price target to $1,300, a 34% upside, while maintaining an outperform rating on the stock. The analyst calls Supermicro the “branded server market share leader” and believes the company is well on its way to leading the pack. His company estimates the market is worth $560 billion and will account for 16% of the generative AI server market.

Demand is accelerating

Since most generative AI is processed in data centers, the resulting upgrade cycle is booming and is expected to continue. Bernstein analyst Toni Sacconaghi predicts that the artificial intelligence server market will grow 75% annually over the next three years and said the expansion is “unprecedented.” “

In addition, AMD continues to Increase in market share At the expense of its larger rivals, thanks in part to a partnership with the largest maker of artificial intelligence chips, the company has early access to the most popular processors.

The stock has been on a tear since the beginning of last year, rising more than 1,200%, and as of this writing is up 276% this year alone. Despite its parabolic rise, it’s still surprisingly affordable, selling for less than 3x annual sales.

In the company’s second quarter of fiscal 2024 (ended Dec. 31), AMD’s revenue soared 103% and earnings per share soared 71%, despite significant capital investments to increase production. Given this growth, I don’t expect AMD’s stock price to remain unchanged. So cheap for a long time.

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JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Danny Weiner Worked at Super Micro Computer. The Motley Fool is employed by and recommended by JPMorgan Chase. Motley Fool at disclosure policy.

Why Super Micro Computer Stock Is Rising Monday Morning Originally published by The Motley Fool

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