Super Micro stock jumps: Why JPMorgan rates it an Overweight
Shares of Super Micro Computer (SMCI) jumped on Monday after analysts at JPMorgan initiated coverage of the stock with an Overweight rating and a $1,150 price target. In the note, analyst Samik Chatterjee writes that "Super Micro is the leading company in the AI compute market, which is burgeoning with demand stemming from training AI models."
Yahoo Finance's Josh Lipton and Akiko Fujita discuss the call in the video above.
For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.
Editor's note: This article was written by Stephanie Mikulich.
Video Transcript
[MUSIC PLAYING]
- Time now for our call of the day. And we're going to start here with JP Morgan. Initiating coverage on Super Micro. With an overweight rating that stock jumping on the news in today's trade. Look at that about 10% pop. So A key go Super Micro does get a new friend on the street JP Morgan. Initiates the name with an overweight. Stock is already a complete monster. It's up about 275% this year. But JP Morgan says, you know what you should still buy it. Because even if at these levels a key go, they look at growing AI server market. And that they say justifies this premium valuation. Talking about that AI server market they see going from $41 billion in 2023 to more than $280 billion in 2028. And they clearly think Super Micro has some real competitive advantages in that market.
- Yeah. You look at the price target at 11:50, so what is that worth more than?
- It's a nice pop from here. Yeah.
- Upside from where it's already been. To your point 275% growth year to date, at least on the stock specifically. And you put-- talk about the growth outlook that they see. They see revenue at a 43% annual clip between 2023 and 2027. So we're talking about the next four years. That would bring the market share to fit 10% to 15% as well. We've talked a lot about the stock for the latest. Maybe-- Yeah. That chart says it all. But that's moving in tandem with NVIDIA. And it really is about the AI potential, NVIDIA with the chips Super Micro with the data servers.
- Yeah. Investors are just so hungry to play that theme. So the moves you see NVIDIA and Broadcom and certainly this one, they did by the way highlight some risks. That they say, investors should be aware of the industry could become increasingly competitive of course. Enterprises they say they might delay investments for initial returns. On AI use cases aren't so great. But that's not their base case their buyers.
