Rosenblatt initiates SMCI at Buy, says AI revenues accelerating

Investing.com -- In a note Monday, Rosenblatt analysts reinitiated coverage of Super Micro Computer (NASDAQ:SMCI) with a Buy rating and a 12-month price target of $60, citing the company’s accelerating AI revenues and increased visibility. 

"AI revenues are now nearly 70% of sales and are accelerating and increasing visibility to 1-2 years," the analysts stated.

Rosenblatt highlights the company's strong position in the AI space, noting that "investors have started to appreciate the company’s inherent innovation, design, deployment, and manufacturing scale capabilities." 

They add that this positioning has been reinforced by the growing significance of generative AI technologies.

The analysts also emphasize Supermicro’s expertise in "Green" computing and its unique architecture, including the "building block architecture (BBA)," "plug-and-play," and "Twin architecture," which are vital to optimizing performance in AI-driven environments. 

"We view the company's ability to deliver liquid cooling at scale as a competitive advantage," Rosenblatt analysts added, as Supermicro's liquid cooling technology can boost rack compute power by over 2x—an advantage in the power-constrained data center landscape.

Rosenblatt’s $60 price target is based on a 14x NTM Non-GAAP EPS multiple, underscoring the analysts' positive outlook for Supermicro's continued growth. 

The firm believes Supermicro’s long history and scale in AI make it a “formidable business model” in the current landscape.