Super Micro Computer Inc (NASDAQ: SMCI) has had a turbulent few months but it’s been rallying rather sharply into its earnings release scheduled for February 11 after the bell.
The AI server company has seen its share price soar more than 50% since last Monday – but a CFRA analyst looks convinced that it could rip further up after today’s business update.
Shreya Gheewala upgraded SMCI stock this morning to “buy” and raised her price target to $48 indicating potential for another 20% gain from current levels.
Supermicro stock remains dominant in the AI server market
There have been multiple reports of Supermicro having lost share to rivals while it was dealing with accounting issues first flagged by Hindenburg and later endorsed by its ex-auditor Ernst & Young.
Still, CFRA’s Gheewala continues to see further upside in SMCI shares as she’s convinced its “dominant position in liquid cooling and advantage with Nvidia Blackwell B200 rack solutions showcases its AI infrastructure leadership.”
Last week, Super Micro Computer announced the full production availability of its AI data center “Building Block Solutions” powered by Nvidia’s Blackwell platform.
Supermicro stock, however, remains unattractive for income investors as it does not currently pay a dividend.
SMCI could regain share and improve margins in 2025
CFRA remains bullish on Super Micro Computer Inc. as it’s strongly positioned to benefit from the rising hyperscaler demand.
“Proven rapid development capabilities and expanding product portfolio” could help the AI server company regain some of the lost market share and recover its margin to mid-teens in the near term, according to Shreya Gheewala.
Investors may particularly reward Supermicro stock in after-hours if its management reiterates its intention to report the long-due annual report by the February 25 deadline.
Despite the recent surge, SMCI shares are still down about 60% versus their high in March of 2024.
Super Micro Computer is currently trading at a deep discount to other AI darlings like Nvidia on a forward PE basis.
What to expect from Super Micro Computer’s Q2 earnings
Consensus is for Supermicro to report a 60% year-on-year increase in its revenue to $5.89 billion for its December quarter.
That’s on top of three straight quarters of more than 100% annualized growth in revenue on the back of continued momentum in AI infrastructure demand.
All in all, CFRA analyst Shreya Gheewala expects shareholders to abundantly reward SMCI stock on February 11th as long as its earnings release doesn’t significantly disappoint.
Note that Lynx Equity analysts share her optimism on Supermicro stock.
They expect continued growth in the artificial intelligence server market and potential benefits SMCI could reap from Nvidia’s next-gen hardware to push its share price up to $60 by the end of 2025.
Lynx’s price target translates to a close to 50% upside from here.
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