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Super Micro Computer (NASDAQ:SMCI) shares surged 4% higher on Tuesday morning after Raymond James began coverage of the AI-focused server company with an "Outperform" rating and a price target of $41.
The brokerage said Super Micro has positioned itself as a leading supplier of infrastructure tailored for artificial intelligence workloads. Analyst Simon Leopold noted that around 70% of the company's revenue now comes from AI platforms, with gains in market share among branded server makers.
Raymond James highlighted Super Micro's ability to combine large-scale manufacturing with flexible, engineering-led solutions. The company sits between traditional IT providers like Dell Technologies (NYSE:DELL) and HP Enterprise (NYSE:HPE), and contract manufacturers such as Quanta.
While Super Micro may not offer the consulting or financing options of larger firms, its ability to deliver customized, high-performance hardware has helped it capture 9% of the total AI platform market and about 31% among branded players.
The analyst cited increasing demand for hyperscale AI infrastructure and the rollout of NVIDIA's (NASDAQ:NVDA) Blackwell chips as key growth drivers. Despite volatility tied to product shifts and limited enterprise services, Raymond James expects the company's expanding U.S. operations and 25%+ revenue CAGR to support further valuation upside.
This article first appeared on GuruFocus.