Stock of Super Micro Could Rise to $1,300, According to Wall Street's Biggest Bull

A mere year ago, Super Micro Computer Inc. found itself with its stock hovering around the $90 mark. Fast forward to today, and an analyst envisions a trajectory that could propel it to $1,300.

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Over the past year, Super Micro's shares (SMCI, -10.06%) have undergone a substantial journey, closing at approximately $800 this past Friday. The server manufacturer has positioned itself as a beneficiary of the frenetic expenditure on artificial intelligence (AI). Analyst Hans Mosesmann from Rosenblatt Securities, with a target that stands as the highest among analysts surveyed by FactSet, is forecasting a potential upside of around 60% from the closing price on Friday.

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Despite Mosesmann's optimism, Super Micro's shares experienced a nearly 8% decline shortly after the market opened on Tuesday.

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Mosesmann emphasized that the crux of the narrative revolves around investors recognizing that the company's prosperity is not solely tethered to the secular growth of AI but is also propelled by substantial gains in market share. He anticipates that these gains will escalate to double digits within the next couple of years, up from the current mid-single digits, with a distinct emphasis on enterprise expansion.

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The analyst highlighted the pivotal role of the company's liquid-cooling technology, citing it as a significant advantage. This technology is deemed crucial for surmounting challenges associated with large-scale cloud computing in the realm of AI. Given the power-intensive nature of AI workloads, Super Micro is expected to witness heightened interest in its technologies, which promise enhanced performance for demanding operations.

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Moreover, Mosesmann underscored the company's triumph in securing market share within a relatively stagnant market for general-purpose Xeon processors. This success is attributed to its U.S.-centric manufacturing approach, indicating a readiness to confront and adapt to the dynamic demands of AI, encompassing liquid cooling and a comprehensive array of product offerings.

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Presently boasting a market capitalization of approximately $45 billion, Super Micro is covered by 15 analysts. Mosesmann anticipates an influx of additional analysts joining the fray soon, shedding more light on the company's business model and the prospects within its total addressable market.

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A recent development saw a BofA Securities analyst initiating coverage with a bullish rating, bolstering positive sentiment around the company.

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Looking ahead, Mosesmann remains bullish on Super Micro's long-term earnings potential. He envisions earnings per share surpassing $60 by the calendar year 2026, marking an increase from his prior estimate of $45. These adjustments, according to Mosesmann, underscore confidence in the company's capacity to outperform within an evolving technological landscape.

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