Analysts at Argus initiated coverage of Super Micro Computer (NASDAQ:SMCI) with a Buy rating and a $1,350 price target in a note this week.
The firm described the company as a "leading computer and server provider for the age of generative AI."
In addition to a full line of rack and blade servers for cloud, enterprise, data center, and other applications, Super Micro provides GPU-based systems for deep learning, high-performance computing, and other applications.
"Super Micro is experiencing accelerating revenue and particularly earnings growth as demand for its server and computing solutions expands rapidly," explained the firm.
Analysts added, "Super Micro has been growing earnings at an average annual rate of 53% in recent years, while the Tech industry earnings are growing at low double-digit percentages."
Argus feels generative AI is driving unprecedented demand for SMCI's advanced applications requiring optimized rack-scale solutions. Analysts note the company is on track for 100%-plus revenue growth for FY24.
"Despite the explosion in the stock price, valuations for SCMI have not soared out of sight," argue analysts. "Although the SMCI shares are not inexpensive, we believe prospects for near-term and long-term growth justify investment in the shares at current levels."