Looking for a Dirt Cheap AI Stock With Massive Upside? 1 Analyst Firm Thinks Super Micro Computer Can Soar 66%.

Keithen Drury, The Motley Fool

Sat, Mar 22, 2025, 5:15 AM 4 min read

Super Micro Computer (NASDAQ: SMCI) is 1 of the much arguable stocks connected Wall Street. After allegations of accounting missteps past year, an outer committee recovered nary wrongdoing, and the institution hired a caller accounting firm, which has released each the indispensable fiscal statements to comply with Nasdaq banal speech and Securities and Exchange Commission guidelines.

While that was a chaotic roller-coaster thrust to instrumentality investors on, the banal is conscionable 50% higher than erstwhile it entered 2024, contempt rising much than 300% astatine 1 clip successful the past 15 months. This seems similar a banal that could person overmuch much worth than the marketplace realizes, particularly due to the fact that it inactive has a achromatic oculus from the accounting allegations.

Northland Securities bumped its terms people for Super Micro Computer (often called Supermicro) to $70 per share, which would bespeak 66% upside from Friday's close. That would beryllium a monolithic summation for the stock, and immoderate capitalist would emotion to person a performer similar that successful a portfolio.

But is that a realistic anticipation for Supermicro?

Supermicro is different institution benefiting importantly from the AI boom. It makes parts for server racks that location and chill GPUs. This whitethorn dependable boring, but it's an important portion of the artificial quality (AI) infrastructure being built globally.

Most of the competitors successful this abstraction don't person a differentiating factor, but Supermicro does. Its nonstop liquid cooling (DLC) exertion allows GPUs (which nutrient a batch of heat) to beryllium cooled with liquid alternatively than air. This whitethorn outgo other up front, but absorption estimates this exertion saves its clients 40% successful vigor costs and occupies 80% little space. The ratio allows racks to beryllium placed person unneurotic due to the fact that determination isn't arsenic overmuch airflow needed to chill them.

One of the biggest maturation catalysts for Suipermicro is Nvidia's caller GPU architecture, Blackwell. Supermicro's DLC has been engineered with Blackwell successful mind, so, if Nvidia's Blackwell GPUs merchantability good and proceed proliferating, Supermicro volition straight payment from that.

With the AI infrastructure and unreality computing movements acold from finished, Supermicro inactive has tons of country near for growth, which we're seeing play retired close now.

In the 2nd 4th of fiscal 2025 (ending Dec. 31), Supermicro's income totaled $5.7 billion, up 55% from the year-ago period. Management provided a akin outlook for the 3rd quarter, with gross expected betwixt $5 cardinal and $6 billion, astir 43% growth. This maturation question is expected to persist for immoderate time. CEO Charles Liang projects $23.5 cardinal to $25 cardinal successful gross for fiscal 2025 and $40 cardinal for fiscal 2026.