Shares of Super Micro Computer (NASDAQ: SMCI) have been on a tear in the past year, with gains of a staggering 795%. The company’s success can be attributed to the growing demand for its artificial intelligence (AI) server solutions, which has propelled its business to new heights. Loop Capital analyst Ananda Baruah is bullish on Supermicro’s future prospects and has upgraded his price target on the stock from $600 to $1,500, a 54% increase from its current trading price.
Baruah’s optimism is based on Supermicro’s projected revenue and earnings growth over the next few years. The company is expected to double its revenue to $14.5 billion by fiscal 2024, with earnings nearly doubling to $22.10 per share. Despite analysts predicting a slowdown in growth over the next two fiscal years, Baruah believes Supermicro could generate between $30 billion and $40 billion in revenue by 2026, with earnings jumping to $50 to $60 per share.
Supermicro’s management is also confident in the company’s growth potential, with plans to expand production facilities to support annual revenue capacity above $25 billion. This focus on enhancing manufacturing capacity could set the stage for further growth in the AI server market.
Investors can expect significant upside potential in Super Micro Computer, with Loop Capital’s $1,500 price target based on a forward earnings multiple of 30 in fiscal 2026. However, given the premium valuation that AI stocks command, there is a chance for even stronger upside than forecasted. With Supermicro’s price-to-sales ratio lower than the tech sector average, investors could be getting a good deal on this AI stock.
While Super Micro Computer may not be among the 10 best stocks identified by The Motley Fool Stock Advisor analyst team, the company’s growth potential is undeniable. As the AI market continues to expand, Supermicro’s position as a key player in the industry could lead to significant returns for investors in the coming years.
