This year has been an absolutely incredible one for a wide range of artificial intelligence (AI)-related stocks. For Super Micro Computer (NASDAQ:SMCI), this has certainly been the case, with the stock already more than tripling on a year-to-date basis. However, today’s double-digit move in SMCI stock has the stock now within spitting distance of $1,000 per share and a fresh new all-time high.
Today’s rally in the high-performance server and data center storage company appears to be tied to both broad-based macro tailwinds and some company-specific catalysts. Most notably, a new “buy” rating from BofA Securities has the stock headed higher today, as analysts placed a whopping $1,040 price target on SCMI stock.
Now, with Super Micro’s stock price nearing that price target, investors certainly need to consider whether this stock can continue on this incredible run or if a breather is likely. Let’s dive into why analysts, investor, and the overall market remains bullish on this data center name right now.
The Bull Run Is On for SMCI Stock
Analysts remain bullish on Super Micro for a number of key reasons. The company’s positioning as a key player in data center storage and operations for AI applications is key. Its involvement in working with AI chip makers to create vast computing systems is something long-term investors are very excited by, particularly as we enter what could be a new era of AI.
Server and storage solutions are perhaps the less sexy side of the AI industry, but they are integral to the long-term functioning of various top applications. In order for any AI application to thrive, both the computing power (the chips) and the storage location (the server farms) need to be in place and stable. Super Micro provides the latter to many companies, and its business model is uniquely intertwined with that of various chip makers.
Super Micro’s recent results highlighted impressive earnings growth, which was nearly 50% higher than the consensus estimate. Thus, Wall Street analysts and Main Street investors both seem to agree that Super Micro will be a key direct beneficiary of the AI boom.
If the company can continue to pump out earnings beats at this scale, SMCI stock could certainly have plenty of fuel to move higher. Of course, trees don’t grow to the sky, and I’d expect to see a pullback at some point. But for now, the sky does appear to be the limit for SMCI stock.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
