This article first appeared on GuruFocus.
Supermicro (NASDAQ:SMCI) shares inched higher Thursday after Argus Research flipped bullish on the stock, saying the worst looks priced in and brighter days could be ahead. The firm upgraded Supermicro to Buy from Hold, slapping a $64 price target on the stock.
Argus believes investors have already punished Supermicro enough for its revenue shortfall and margin hiccups last quarter. The company’s missteps are fully reflected in the share price, while its growth potential is being overlooked, the analysts said. They also noted that Supermicro is finally compliant with Nasdaq’s filing rules again meaning the regulatory noise is now in the rearview mirror.
The analysts see huge tailwinds coming from generative AI, which continues to drive massive demand for Supermicro’s liquid-cooled, rack-scale servers. The company’s $13 billion backlog in Nvidia (NASDAQ:NVDA) Blackwell-based systems and growing shipments with AMD (NASDAQ:AMD) MI300X GPUs underline that momentum.
Even after rallying 50% this year, shares still trade at less than half their 2024 peak. Argus says that’s a clear opportunity as AI spending keeps ramping up.