15 Best Data Center Stocks To Buy According to Jefferies, Citi and Wall Street Analysts

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

Average Analyst Share Price Target Upside: 65%

Average Analyst Share Price Target: $1,003.81

Number of Hedge Fund Investors  in Q1 2024: 35

Super Micro Computer, Inc. (NASDAQ:SMCI) is a pure play data center hardware stock since it makes and sells equipment such as server racks and workstations. It also benefits from a key partnership with NVIDIA, with the two having teamed up to offer liquid cooling solutions for NVIDIA’s products. Like several data center colocation stocks on our list, Super Micro Computer, Inc. (NASDAQ:SMCI) also benefits from industry ties that see it work not only with NVIDIA but also with AMD and Intel. This means that the firm has a ready, off the shelf portfolio of products that can be easily deployed, which provides Super Micro Computer, Inc. (NASDAQ:SMCI) with a robust product portfolio. At the same time, it also benefits from its key partnership with NVIDIA for the next generation Blackwell GPUs, which are pricier and can offer Super Micro Computer, Inc. (NASDAQ:SMCI) room for additional growth.

However, fund Artisan Partners had an interesting take on Super Micro Computer, Inc. (NASDAQ:SMCI) in its Q2 2024 investor letter where it shared:

“Super Micro Computer manufactures server racks for central processing units and GPUs that have experienced an artificial intelligence-driven uptick in demand from its cloud and enterprise customers. This company has been on our radar for years, and we met with them in our Milwaukee offices in early 2023. However, we don’t consider the stock investable given corporate governance issues. Regarding MicroStrategy, our decision to avoid this company comes down to a lack of conviction in its franchise characteristics. The stock has worked this year due to a rebound in the price of bitcoin. Since 2020, MicroStrategy has been focused on converting its cash and cash equivalent holdings, as well as issuing debt, to fund the purchase of bitcoin, which now makes up most of the company’s value.”

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