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SMCI stock: BofA ups Super Micro Computer target on competitive AI advantages

Published 03/13/2024, 07:03 AM

Super Micro Computer (NASDAQ:SMCI) stock extended gains after Bank of America analysts hiked the price target by $240 to $1280 per share. They believe the company remains well positioned in a growing artificial intelligence (AI) server market. SMCI stock is up over 300% year-to-date and more than 1150% over the last 52 weeks.

Shares rose 0.7% in pre-market hours Wednesday.

The move comes after BofA analysts updated their forecasts for the AI server industry, projecting significant growth over the next few years. 

According to the bank's semiconductor analyst team, industry revenues are expected to surge from approximately $39 billion in 2023 to around $200 billion by 2027. This optimistic revision highlights the expanding total addressable market (TAM) for accelerators.

More precisely, Super Micro Computer is identified as a company well-positioned to benefit from this growth, thanks to its competitive advantages. 

“SMCI’s competitive advantages include building block architecture which helps to quickly incorporate new technology and reduce time to market, relationship with leading AI CPU/GPU/ASIC providers including Intel (NASDAQ:INTC), Nvidia (NASDAQ:NVDA), and AMD (NASDAQ:AMD),” analysts said in a note. 

Moreover, they highlighted the company’s “ability to customize configurations to specific customer applications and its liquid cooling offerings.”

Bottom line, BofA believes that SMCI is anticipated to experience robust revenue growth fueled by server demand across several applications. 

This includes AI, high performance computing, big data analytics, and workloads in engineering and technology. Furthermore, streaming, content delivery, and compute-intensive graphics, along with online gaming, are expected to drive demand.

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