JPMorgan sees further SMCI stock upside amid AI compute market leadership position
Alongside Nvidia (NASDAQ:NVDA), Super Micro Computer (NASDAQ:SMCI) is the company that has been capturing the most attention within the artificial intelligence (AI) space this year, thanks to a meteoric rise in its share price. Despite breakneck gains, JPMorgan analysts said in their fresh coverage that they see more upside potential in the SMCI stock.
The exceptional rally in SMCI stock this year comes primarily thanks to the server manufacturer’s strategic advantage in the generative AI sector and its strong partnership with Nvidia.
This relationship positions Super Micro favorably against competitors such as Dell (NYSE:DELL) and Hewlett Packard Enterprise (NYSE:HPE) by enabling quicker product launches.
Historically, Super Micro has been one of the first companies to access AI chips from both Nvidia and Advanced Micro Devices (NASDAQ:AMD), aiding in the testing of server prototypes. This early access has been a key factor in establishing the company as a vital supplier of servers that power generative AI applications, contributing to a more than 240% surge in SMCI stock price this year.
Located less than 10 miles from Nvidia and AMD in California, Super Micro has the capability to rapidly respond to market demands. Analysts note the company can manufacture, assemble, test, and ship a server rack within just a few weeks, provided that all components are on hand.
Super Micro's strategic positioning is reflected in its financial performance, with revenue more than doubling in the last quarter of 2023. Analyst expectations, as surveyed by LSEG, predict continued triple-digit growth at least through the September quarter of 2024.
Similarly, Bank of America analysts foresee Super Micro's share in the AI server market
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