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On Friday, Mizuho (NYSE:MFG) Securities adjusted its outlook on Super Micro Computer (NASDAQ:SMCI) shares by increasing the price target to $40 from the previous target of $32. Currently trading at $46.15, the stock has shown remarkable momentum with a 37.42% gain in the past week. The firm maintained a Neutral rating on the stock. The revision reflects Mizuho’s view of Super Micro’s solid positioning in the artificial intelligence (AI) server market and potential growth from its recent DataVolt partnership. According to InvestingPro analysis, the company appears slightly undervalued based on its Fair Value estimates.
The research firm’s analyst noted that Super Micro Computer is well situated to capitalize on the expanding AI server sector, which is expected to experience growth into 2026 and beyond. This optimism is supported by the company’s impressive 82.49% revenue growth over the last twelve months. The company’s market share in this niche is robust, and the partnership with DataVolt is seen as a significant tailwind for its future performance.
Despite the positive outlook on the company’s market position and the expected benefits from its DataVolt collaboration, Mizuho also pointed out that Super Micro faces challenges. The firm highlighted increasing competition in the industry and the current weak margins in the AI server market as potential headwinds that could impact the company’s performance. InvestingPro data confirms this concern, showing a relatively low gross profit margin of 11.27%.
The revised price target of $40 is based on a 12.5 times multiple of Mizuho’s estimated earnings per share for fiscal year 2026. This is an increase from the previous multiple of 10 times. The adjustment signifies Mizuho’s expectation of Super Micro’s enduring presence and potential in its market segment.
Super Micro Computer specializes in high-performance server technology and is known for its innovation in the AI server space. The company’s stock price will continue to be observed by investors as it navigates the competitive landscape and leverages its strategic partnerships. For deeper insights into SMCI’s financial health and growth prospects, investors can access the comprehensive Pro Research Report, along with 18 additional ProTips available on InvestingPro.
In other recent news, Super Micro Computer has announced a strategic partnership with DataVolt to build AI campuses in Saudi Arabia, utilizing advanced liquid cooling technology. This collaboration is projected to involve products worth a minimum of $20 billion. Additionally, Supermicro has unveiled its Data Center Building Block Solutions (DCBBS), aimed at simplifying the construction of liquid-cooled AI data centers. The DCBBS offering includes comprehensive packages with servers, storage, networking, and support services, promising significant reductions in power and water usage, as well as total cost of ownership.
In terms of analyst activity, Loop Capital maintained a Buy rating with a $70 price target, citing the potential benefits from the DataVolt deal. Conversely, Citi retained a Neutral rating with a $37 target, expressing caution due to competitive pressures. Meanwhile, Goldman Sachs continues to hold a Sell rating with a $24 target, despite acknowledging the positive implications of the DataVolt agreement. The agreement with DataVolt is expected to enhance Super Micro’s standing in AI infrastructure, though the specifics of the contract remain under negotiation.
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