Super Micro Computer Joins S&P 500 Index: An ‘AI Winner At Premium Valuation,’ Analyst
Super Micro Computer, Inc. (NASDAQ:SMCI), a leading manufacturer of artificial intelligence (AI) servers, is joining the S&P 500 Index on March 18, alongside Deckers Outdoor Corp . (NYSE: DECK)., a California-based footwear designer and distributor.
These new additions will replace Whirlpool Corporation (NYSE:WHR) and Zions Bancorporation N.A. (NASDAQ:ZIONS).
Concurrently, Goldman Sachs initiated coverage of Super Micro Computer Inc., setting the stage with a Neutral rating and a 12-month target price of $941, implying a very stretched upside potential from current levels.
Analyst Michael Ng, CFA, highlighted in a Monday note that SMCI, known for its high-performance server and storage systems, has evolved into a significant player in AI infrastructure, thanks in part to its partnerships with industry giants like Nvidia Corp. (NASDAQ:AMD), Advanced Micro Devices Inc. (NASDAQ:AMD), and Intel Corp. (NASDAQ:INTC).
However, while the company is considered at the forefront of the AI infrastructure boom, Goldman Sachs’ bullish outlook is tempered by considerations of competitive pressures and valuation metrics.
AI Demand Surges Ahead
Michael Ng pointed out the budding nature of the AI market and suggested that the demand for AI compute systems might surpass current estimates.
As SMCI ramps up its production capacity in anticipation of this burgeoning demand, the company is well positioned to see improved margins and a broader market reach.
SMCI Outperformed NVIDIA
SMCI’s shares have seen a near 1,000% surge in the past 14 months, doubling the gains of NvidiaCorp. While in 2023, SMCI’s stock closely mirrored NVDA’s performance, the first two months of 2024 have seen SMCI pull ahead significantly, boasting a 205% increase compared to NVDA’s 60%.
