This is Super Micro's path to $1,500, according to the stock's biggest bull

By Emily Bary

Loop Capital analyst sees the possibility of a positive preannouncement and thinks investors are underestimating long-term revenue potential

Does the S&P 500's best-performing stock so far this year have another monster rally ahead of it?

That's what Loop Capital's $1,500 price target on shares of Super Micro Computer Inc. (SMCI) implies. That new target, which came out Tuesday morning and is up from $600 previously, suggests more than 50% upside for Super Micro's stock relative to recent levels. It's also the highest listed on FactSet.

The increased optimism from Loop's Ananda Baruah helped drive Super Micro shares up 10.6% in Tuesday's session to log their best daily performance in over a month, though they're pulling back about 1% in Wednesday action alongside general chip-sector weakness.

The stock is up 240% so far this year and 775% over a 12-month span, to a recent $966. Super Micro stock joined the S&P 500 SPX in mid-March.

See also: Why Nvidia's stock looks especially juicy in the near term, according to Citi

Baruah said in his report that he has growing confidence about the market opportunity for artificial-intelligence servers and Super Micro's positioning within it. The company is "an increasing leader in the need for both complexity and scale," he wrote.

Super Micro's business seems "very healthy," and Baruah expects the company to post strong March-quarter numbers along with a compelling outlook for the June quarter. Given the expected strength, he said he wouldn't be surprised if the company positively preannounces results for the latest quarter. If so, that might happen between April 18 and April 24, he offered.

A positive preannouncement would be notable since the company already blew Wall Street away with its December-quarter performance and issued a blowout forecast for $3.7 billion to $4.1 billion in the March quarter.

Read: Nvidia isn't just a chip stock, and could soar 30% when investors realize that

But Baruah thinks the company could end up posting at least $4.1 billion to $4.5 billion in March-quarter sales, before going on to forecast June-quarter revenue even above that. The company's recent capital raise suggests the company has won a nice chunk of generative AI business recently, he said - perhaps $7.0 billion.

"While it's not truly possible to know the magnitude of these wins or timeframe of deployments, there has been a general industry dynamic of standing up deployments faster as opposed to slower," he wrote. "We also note our view that [Super Micro] has been raising capital for increasingly larger project wins, which suggests deployment times may not be tremendously drawn out."

Thinking longer-term, Baruah thinks investors are underappreciating the company's revenue potential.

Don't miss: Look out, Super Micro - Dell is gaining steam, and its stock could keep soaring

-Emily Bary

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04-17-24 1441ET

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