THE S&P500 (INDEXSNP: ^GSPC) is the most popular benchmark index in the US stock market. The index includes 500 large-cap companies, currently defined as companies worth at least $18 billion, and covers approximately 80% of the nation’s stocks by market capitalization. To be considered, a company must also be profitable and its shares must be sufficiently liquid.
Super microcomputer (NASDAQ:SMCI) became the newest artificial intelligence (AI) company in the S&P 500 when it joined the index in March 2024, just over a year after joining the S&P 500. S&P MidCap 400 in December 2022. Meanwhile, shares have soared more than 1,700% over the past two years as strong demand for AI computing products has fueled rapid sales growth.
The stock still enjoys a Buy consensus rating among Wall Street analysts, and the median price target of $965 per share implies a 26% upside from its current price of $762 per share. Here’s what investors should know about Supermicro.
Super Micro Computer gains share in AI server market
Super Micro Computer develops accelerated computing platforms, such as storage and servers for enterprise and cloud data centers, purpose-built for use cases such as 5G and artificial intelligence (AI). Its platforms integrate the latest chip, memory and storage solutions from vendors such as Advanced microsystems, IntelAnd Nvidiaso that Supermicro offers its customers a high degree of flexibility in customizing their IT products.
Additionally, the company has a unique modular approach to product development. It can usually integrate the latest technologies into its servers and bring them to market before other manufacturers. During the recent earnings conference call, CEO Charles Liang told analysts: “We provide optimized AI solutions at scale, delivering a faster time-to-market and faster delivery time advantage.” short compared to our competitors. »
Analysts at Bank of America believes that competitive advantage will increase its market share in artificial intelligence servers, so that Supermicro will account for 17% of sales in 2026, up from 10% in 2023.
Jim Kelleher at Argus is also optimistic. “We believe Supermicro has a head start on existing server vendors and is the partner of choice for Nvidia and other industry leaders for implementing AI,” he wrote in a note addressed to customers. “Supermicro emerges as a go-to provider for data center implementation of GPU computing infrastructure used in large language model (LLM) training, inference, deep learning and other elements enabling generative AI applications. »
Super Micro Computer suffered a slight setback in the third quarter
Supermicro stocks plunged 15% when the company reported third-quarter financial results that missed revenue estimates, but investors may have overreacted. Revenue rose 200% to $3.8 billion in the quarter, just short of the 209% growth Wall Street expected. However, non-GAAP net income still jumped 308% to $6.65 per diluted share, easily surpassing the…
