Needham analyst Quinn Bolton has initiated coverage on Super Micro Computer (SMCI) with a Buy rating and a price target of $600, signaling a strong belief in the company’s future growth potential. Bolton highlighted Super Micro’s position as a key player in the rapidly expanding AI infrastructure market, noting the company’s involvement in deploying some of the world’s largest AI clusters.
Bolton forecasts an impressive revenue CAGR (Compound Annual Growth Rate) of over 55% for Super Micro from fiscal 2021 to fiscal 2026, driven by increasing investment in AI infrastructure. The analyst also emphasized Super Micro’s strong position in the liquid cooling market, where the company is a pioneer in rack-level solutions. He believes that Super Micro’s ability to offer innovative liquid cooling solutions will further drive market share gains.
While the recent short seller report from Hindenburg Research has led to a decline in Super Micro’s stock price, Bolton maintains his optimistic outlook. He argues that the stock price already reflects most of the risks associated with the internal controls review, and he believes the bear case scenario of single-digit gross margins is overly pessimistic.
Super Micro is actively expanding its manufacturing capacity, including its liquid cooling rack capacity in Silicon Valley and Taiwan. The company is also set to begin production at its new Malaysia campus in November, which is expected to double its manufacturing capacity in the long term. These capacity expansion efforts, combined with growth in emerging markets, are expected to drive fiscal 2025 revenue to a range of $26 billion to $30 billion, representing a significant year-over-year increase.
Investors seeking exposure to Super Micro can consider ETFs such as the iShares Future AI & Tech ETF (ARTY) and the iShares U.S. Digital Infrastructure and Real Estate ETF (IDGT).
Despite recent market volatility, Bolton’s bullish stance on Super Micro highlights the company’s strong fundamentals and potential for continued growth in the rapidly evolving AI and liquid cooling markets. Super Micro’s commitment to innovation and expansion positions the company well to capitalize on these emerging opportunities.
