11 Best Data Center Stocks To Buy According to Analysts

02. Super Micro Computer, Inc. (NASDAQ:SMCI)

Upside Potential: 72.80%

Latest Average Share Price Target: $790

Super Micro Computer, Inc. (NASDAQ:SMCI) is a prominent player in the data center industry, offering a wide array of high-performance server and storage solutions. As a global leader in modular and open-architecture systems, the company caters to various sectors, including enterprise data centers, cloud computing, artificial intelligence (AI), and 5G edge computing. Super Micro Computer, Inc. (NASDAQ:SMCI) products, including server management software, rackmount and blade servers, and liquid cooling solutions, make it a key provider in the rapidly evolving data center landscape. Its cutting-edge technology, particularly in direct liquid cooling (DLC) systems, allows it to optimize efficiency and performance in AI-driven environments, positioning it as a top pick for data center-related investments.

Despite missing Q4 earnings expectations, with reported earnings per share (EPS) of $6.25 compared to expected $8.12, Super Micro’s financial fundamentals remain robust. For fiscal year 2024, the company achieved an impressive 110% year-over-year revenue growth, reaching $14.94 billion. This strong revenue increase is driven largely by Super Micro’s leadership in AI infrastructure, with its Generative AI training and inferencing technologies playing a significant role. The company’s Q4 revenue surged to $5.31 billion, up 143% year-over-year, despite supply chain bottlenecks delaying approximately $800 million in shipments.

Super Micro Computer, Inc. (NASDAQ:SMCI) operating margin in Q4 was 7.8%, impacted by a higher mix of hyperscale data center business and increased costs associated with DLC component shortages. However, the company expects profitability to improve in fiscal 2025 as supply chain issues resolve, and new manufacturing facilities in Malaysia ramp up production.

The company’s focus on DLC technology is particularly noteworthy for data centers, as it offers higher performance, lower total cost of ownership (TCO), and improved energy efficiency. Super Micro Computer, Inc. (NASDAQ:SMCI) is already a key supplier to some of the largest AI SuperClusters worldwide. Its goal is to capture 25% to 30% of the global market for DLC solutions in the next 12 months. As the demand for more efficient AI-driven data centers grows, Super Micro Computer, Inc. (NASDAQ:SMCI) innovative solutions and strategic growth initiatives make it a strong candidate for investors looking at the data center sector.