Even after surging more than 192% this year, the tailwinds for this under-the-radar artificial intelligence play are far from over, according to Rosenblatt. Analyst Hans Mosesmann initiated coverage of Super Micro Computer with a $300 price target, saying that the server and storage systems provider aligns with its view of a “secular AI-driven cycle,” or “mother of all cycles” currently underway. The target represents 25% upside from Wednesday’s close. SMCI YTD mountain Super Micro shares in 2023 “SMCI has benefitted in 2023 by the emerging importance of generative AI themes as investors have started to appreciate the company’s inherent innovation, design, deployment, and manufacturing scale capabilities,” he wrote in a Tuesday note. Super Micro’s AI revenue accounts for 30% of sales, and Mosesmann expects that to continue accelerating. Its total addressable market is projected to surpass $178 billion by 2027, and fuel sales at a compounded annual growth rate exceeding 20%. Key to Super Micro’s advantage is its green IT innovation and high-efficiency “resource-saving architecture” that can trim costs, energy consumption and data center e-waste, Mosesmann said. The company’s extensive history in areas such as “Green computing” and “building block architecture” have created a “formidable business model aligned with the critical factors for success in an AI driven world,” he said. Shares should also benefit from demand growth for high-speed, energy-efficient solutions as businesses pivot to cloud-based computing and storage, and opt for hardware that better protects against cyberattacks. The analyst highlighted Super Micro’s liquid cooling at scale technology — an expensive, complex process that can double rack compute efficiency — as one of the biggest competitive advantages for the company, calling it “a disruptive dynamic in a power constrained data center.” — CNBC’s Michael Bloom contributed reporting
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