Super Micro rises as Barclays starts coverage, says 'not too late' to hop on AI train
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Super Micro Computer (NASDAQ:SMCI) shares rose more than 1.5% in pre-market trading on Tuesday as investment firm Barclays initiated coverage on the storage and networking company with an overweight rating, citing the company's exposure to artificial intelligence. 
"Against the backdrop of AI investment trends, we believe SMCI is well positioned to capture the rising AI server opportunity with more share gains ahead driven by its superior design capability and strong AI partnerships," analyst George Wang wrote in an investor note.
Wang, who also put a $327 price target on Super Micro Computer (SMCI), noted that the company's "robust"AI server offerings will allow it to go after an increasing opportunity in the space and result in strong revenue growth over the next few years. 
AI and GPU rack-scale accounted for roughly 52% of the company's second-quarter revenue in fiscal 2023, which Wang believes will rise to 70% in fiscal 2024 and 80% in fiscal 2025, due to the fact that AI servers are roughly 25 times the price of general purpose compute servers with roughly the same gross margins. 
In addition, Wang said that Super Micro Computer (SMCI) should take a "major share" in Nvidia's (NVDA) DGX H100 manufacturing and that it is continuing to gain market share from HP Enterprise (HPE) and Dell (DELL).
Looking ahead, Wang said it's likely the company will make a positive pre-announcement about its upcoming quarter "around" the third week of October and the company should get "strong" wins from a number of companies in the next 12 months, including Tesla (TSLA), xAI (owned by Elon Musk) and customers in the United Arab Emirates.
"We estimate SMCI has 7% market share globally, implying ample share gain potential ahead," Wang added.

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