Super Micro Computer (SMCI +3.55%) stock is making big gains in Monday's trading trading. The company's share price was up 11% at 10:45 a.m. ET.
NASDAQ: SMCI
Key Data Points
Supermicro stock is surging today thanks to bullish coverage from an analyst. Lynx Equity recently published bullish coverage on the stock, and the firm thinks that new hardware from Nvidia will lift the server specialist's performance.
Supermicro could get a boost from Nvidia's next AI processor
Before the market opened this morning, Lynx published coverage on Supermicro stock that gave the equivalent of a buy rating and reiterated Lynx's previous one-year price target of $60 per share. Even with the stock's gains today, the firm's one-year price target suggests additional upside of roughly 60%.
Lynx anticipates that Nvidia's participation in the keynote of the CES conference today could provide a positive near-term catalyst for Supermicro stock. More importantly, the firm's analysts expect that new hardware spotlighted at the conference could provide a more lasting tailwind for the artificial intelligence (AI) server specialist. At the show today, Nvidia is expected to discuss its GB300 processors -- the latest iteration in its next-generation Blackwell line.
Nvidia's graphics processing units (GPUs) are the key hardware in Supermicro's most advanced servers. While Lynx thinks that Supermicro has "mostly stood on the sidelines" of GB200 chip purchases, it also thinks that the server company could be a much bigger purchaser of the GB300 processors.
What comes next for Super Micro Computer?
Despite concerns about an early cyclical downturn from some investors and analysts, demand in the AI hardware infrastructure space continues to look very strong. Last Friday, Microsoft announced in a blog post that it anticipates spending roughly $80 billion on AI infrastructure in 2025. Considering that the tech giant is expected to have spent at least $53 billion in total capital expenditures across 2024, the software leader is poised for a major spending increase. That kind of demand backdrop bodes well for Supermicro.
On the other hand, some big questions still surround the server specialist's stock. Supermicro says that it will file the delayed 10-K report by Feb. 25, and the results will be under the microscope. While the company looks cheaply valued based on its recent growth trajectory, its shares could plummet if previously reported results wind up with significant downward revisions. So even though the company looks undervalued by some metrics, it remains a relatively high-risk play in the AI space.
