Super microcomputer (NASDAQ:SMCI) The stock posted big gains again in Tuesday trading. The server specialist’s share price closed the daily session up 3.7%, according to data from S&P Global Market Intelligence.
While there was no company-specific news that pushed the stock higher today, the tech company’s valuation rose on an analyst’s belief that artificial intelligence (AI) will continue to fuel strong demand for servers. In particular, Super Micro stock appears to have gained ground on the bullish coverage on Dell stock released by Morgan Stanley analyst Erik Woodring. Super Micro stock is now up about 224% in total trading in 2024.
Super Micro climbs on growing demand for AI servers
Citing strong demand for servers capable of powering AI services, Morgan Stanley’s Erik Woodring issued a bullish research note on Dell stock yesterday. The incredible increase in demand for high-performance rack servers has helped drive incredible sales and profit growth for Dell and Super Micro over the past year. In turn, the stock prices of both companies soared.
Thanks in large part to positive coverage of the stock from Morgan Stanley’s senior analyst, Dell’s stock price posted 5% gains in Tuesday trading, and Super Micro’s stock price recorded gains alongside this progression. Even though Dell and Super Micro are showing somewhat competitive momentum in the server space, the promising demand indicators are a bullish indicator for both companies.
What’s next for Super Micro stock?
It seems clear that the AI revolution is only just beginning to unfold. Super Micro positions itself as a leading provider of one-stop, high-performance rack servers capable of powering advanced AI applications. But the evolving nature of AI means investors need to keep developing risk factors in mind before jumping into a hot stock in the sector.
Although Dell’s bullish covering helped drive significant gains for Super Micro stock today, investors should keep emerging competitive dynamics in mind. In particular, some analysts believe that Nvidia might decide to design its own server racks to match the launch of its GB200 AI chip. If this turns out to be the case, it could reduce growth opportunities for Super Micro and other players in the specialty server industry.
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