A popular artificial intelligence play may be nearing the end of its red-hot run, according to Goldman Sachs. Analyst Michael Ng began coverage of Super Microcomputer with a neutral rating on Monday, saying that while the high-performance server company’s partnership with Nvidia, Advanced Micro Devices and Intel has reversed last year’s 825% rally, the shares now look Come “fair value.” SMCI 1Y Mountain Super Microcomputer Over the Last Year “SMCI is well positioned to meet the demand for AI CSP in the next few years, but will likely be more competitive to meet the demand for international AI infrastructure in the coming years, especially will focus more on the enterprise. IT hardware suppliers such as DELL and CSCO,” Ng wrote, referring to cloud services providers. Super Microcomputer has grown to nearly $60 billion in market capitalization and is set to join the S&P 500 later in March. The stock has doubled in the first eight weeks of the year, rising more than 278% in 2024 after climbing 246% in 2023. Hence, the way forward appears to be limited. In his reasons for not being more than a neutral opinion, Ng pointed out that Super Microcomputer currently trades with Nvidia on a price-to-earnings basis. Early next year, he said, he expects earnings growth to slow to 51% from a 61% compound annual growth rate between 2021 and 2024. Ng initiated a $941 price target on SMCI, implying about 4% upside from Friday’s close. Shares rose 20 percent on Monday. — CNBC’s Michael Bloom contributed reporting.
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