Super Micro Computer Inc.'s rally stalled. on Friday, as its stock looked to snap its longest winning streak in more than seven years.
The server maker's shares were up nearly 200% in one month, through Thursday's close, and jumped about 900% on a 12-month basis as well. Wall Street appears to be excited about Super Micro's SMCI,
The ability to capitalize on the AI craze, but Wells Fargo's Aaron Ruckers noted that this enthusiasm may have already been built into the stock price.
He initiated coverage on Super Micro shares with an equal-weight rating and $960 price target on Friday, writing that the stock was already modeling a path to above $40 per share in earnings by 2025.
Super Micro stock was down nearly 12% at midday and was on pace to snap a nine-session winning streak. The streak was the longest since another nine-session winning streak that ended on Aug. 1, 2016, according to Dow Jones Market Data.
See also: Super Micro stock is up 900% in one year. Why would Bank of America make a “buy” call?
Rackers welcomed the stock's “AI-fueled fundamental momentum,” which has been “nothing short of remarkable,” in his view. He attributed the company's success in part to “engineering-first differentiation,” as the company has historically allocated 40% to 50% of its headcount to research and development roles.
“Super Micro's engineering-first culture appears sustainable, as we see the diversity of silicon and the overall complexity of the data center as being poised to become increasingly forward-looking,” he wrote.
The company's liquid cooling offerings are proving to be even more important given the greater power requirements of AI workloads. “Integrating liquid cooling with the development of its own power supplies is a competitive advantage for the company,” Rakers said.
“Although today's liquid cooling deployments represent a very small contribution, [Super Micro] “It is seeing about 205 data center customers expressing interest in the development/need for liquid cooling deployments,” he wrote, and the company could see a 10% to 20% increase in average selling prices for liquid cooling versus air. Cooling systems.
opinion: Why Super Micro clears the floor with the competition
