Barclays has initiated coverage of Supermicro, an information technology company, and predicts that it may benefit from the current hype around artificial intelligence (AI). The firm has given Supermicro an overweight rating and set a price target of $327 per share, suggesting a potential 34% upside from its previous close of $244.30. Supermicro’s stock has already experienced significant growth of 198% since the beginning of the year.
Analyst George Wang highlights that Supermicro is well-positioned to capitalize on the emerging AI opportunity. With its strong AI server offerings, the company is expected to experience substantial revenue growth in the coming years. Wang notes that AI inferencing, which involves a trained neural network model making predictions, already accounted for 52% of Supermicro’s second-quarter revenue. He predicts that this figure could increase to 70% by 2024 and surpass 80% by 2025.
Barclays’ forecast aligns with IDC’s projection of a 17% compound annual growth rate in AI server revenue from 2021 to 2026. This suggests that Supermicro’s revenue growth will reach 46% in FY24 and settle at 17% in FY25. The significant growth potential in the AI market is expected to fuel Supermicro’s success in the years to come.