1) Super Micro Computer, Inc. (NASDAQ:SMCI)
% Increase on a YTD Basis: ~40%
Expected Upside Potential: 90.9%
Number of Hedge Fund Holdings: 47
Super Micro Computer, Inc. (NASDAQ:SMCI) is engaged in developing and manufacturing high-performance server and storage solutions based on modular and open architecture in the US and internationally.
Innovation tailored to enterprise, cloud, AI, and 5G telco/edge IT infrastructure are some of the competitive advantages of Super Micro Computer, Inc. (NASDAQ:SMCI). The market experts opine that the deployment of liquid cooling technologies in some of the largest Direct Liquid Cooling (DLC) AI clouds should aid its revenue growth in the upcoming quarters. Overall, Super Micro Computer, Inc. (NASDAQ:SMCI)’s growth is expected to be aided by the AI infrastructure market leadership. The company expects that 25%-30% of new global data center deployments will adopt its DLC solutions within the next year.
Wall Street analysts remain optimistic about Super Micro Computer, Inc. (NASDAQ:SMCI) as a result of expectations of higher gross and operating margins, stemming from product/customer mix, manufacturing efficiencies, and new platform introductions. The company also focuses on balancing growth between enterprise and large-scale data center customers. It targets to regain its gross margin target range by fiscal year-end.
Super Micro Computer, Inc. (NASDAQ:SMCI) has been leveraging its technology and product leadership to aid its growth momentum, mainly in the AI infrastructure market. Given its strong focus on direct liquid cooling solutions and healthy revenue forecast, Super Micro Computer, Inc. (NASDAQ:SMCI) should maintain its upward trajectory.
As per Wall Street analysts, the shares of Super Micro Computer, Inc. (NASDAQ:SMCI) have an average price target of $64.36. Scout Investments, Inc, an affiliate of Carillon Tower Advisers, released a second quarter 2024 investor letter. Here is what the fund said:
“Super Micro Computer, Inc. (NASDAQ:SMCI) was the top detractor to returns in the second quarter. Super Micro designs and manufacturers server solutions based on modular and open-standard architecture. This modular approach combined with a strong engineering culture helps the company to supply the market with advanced servers and rack-scale compute solutions quickly. After an impressive return in the first quarter, the company offered disappointing near-term earnings guidance, though we do not believe its long-term opportunity has diminished. We expect continued strong growth for several years, although the range of outcomes is quite wide; it is difficult to forecast AI server market growth with precision.”
While we acknowledge the potential of SMCI as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than SMCI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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