Super Micro Computer: The AI Stock Poised to Surpass Nvidia

Published Date: 16/07/2024

Wall Street analysts believe Super Micro Computer is a better AI stock to buy than Nvidia, with a 16% upside potential.

The Nasdaq-100, a growth-focused index, has recently added Super Micro Computer, a leading artificial intelligence (AI) company, to its list. This move highlights the company's growing importance in the AI economy. Super Micro Computer has seen a significant surge in its stock price, outpacing even Nvidia's impressive gains.

Super Micro Computer's success can be attributed to its unique approach to product development and its deep relationships with chip suppliers like Nvidia, AMD, and Intel. The company's ability to bring new technologies to market quickly, often by two to six months, has allowed it to gain market share at an impressive rate.

The company's product portfolio is also one of the broadest in the industry, offering clients a great deal of flexibility in buying custom computing platforms. Additionally, Super Micro Computer has developed building blocks for liquid-cooled AI servers, which can reduce data center power usage by 40%.

Wall Street analysts expect Supermicro to continue its outperformance, with a median price target of $1,030 per share implying 16% upside from its current share price of $886. In contrast, Nvidia's median price target of $133 per share implies only 4% upside from its current share price of $128.

Super Micro Computer's reasonable valuation, with a PEG ratio of roughly 0.78, makes it an attractive option for investors. The company's expected 59% annual growth in adjusted earnings per share through fiscal 2025 further supports its potential as a top AI stock.

The Nasdaq-100 tracks the 100 largest nonfinancial companies in the Nasdaq Composite, a growth-focused index heavily weighted toward the technology sector. Super Micro Computer joined the S&P 500 in March and has since seen its stock surge 188%.

 Super Micro Computer designs and builds computing platforms for enterprise and cloud data centers. The company has a deep relationship with Nvidia, but it also sources chips from suppliers like AMD and Intel.

FAQS:

Q: Why is Super Micro Computer seen as a better AI stock than Nvidia?

A: Wall Street analysts believe Super Micro Computer has a more promising future due to its unique approach to product development, deep relationships with chip suppliers, and growing market share.

Q: What is Super Micro Computer's expected growth rate?

A: Wall Street analysts expect Supermicro to grow adjusted earnings per share at 59% annually through fiscal 2025.

Q: What is the significance of Super Micro Computer's inclusion in the Nasdaq-100?

A: Super Micro Computer's inclusion in the Nasdaq-100 highlights its growing importance in the AI economy and its role as a leading artificial intelligence company.

Q: What is Super Micro Computer's approach to product development?

A: Super Micro Computer handles most research and development internally and builds preassembled servers that can quickly be outfitted with the latest chips and interconnects, allowing it to bring new technologies to market faster than competitors.

Q: What is the significance of liquid-cooled AI servers?

A: Liquid cooling can reduce data center power usage by 40%, and Super Micro Computer is one of the first companies to ship liquid-cooled racks at scale.

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