Why Super Micro Computer Ripped Higher Today

Shares of Super Micro Computer (NASDAQ: SMCI) rallied on Tuesday, increasing 13.8% as of 12:05 p.m. ET.

Supermicro has been a controversial stock over the past six months, as former auditor Ernst & Young resigned in October; however, the company's new auditor, BDO, signed off on the company's financial statements in February, allowing the artificial intelligence (AI) server company to remain listed.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

However, a relatively disappointing June quarter outlook revealed on its May 6 earnings report, at least compared with expectations, sent the stock down again more recently.

Nevertheless, analysts at Raymond James initiated coverage on Supermicro today with an outperform rating and $41 price target -- about 30% higher than where the stock closed yesterday.

"A market leader in AI"

The Raymond James team, led by analyst Simon Leopold, is optimistic on Supermicro due to its continued leadership in AI infrastructure, with around 70% of its revenue coming from AI servers. The team also believes Supermicro occupies a "sweet spot" between the high-end enterprise server makers like Dell Technologies and HP Enterprises and the "original device manufacturers" (ODMs), which make low-cost servers on contract for third parties like the cloud giants.

Supermicro's "middle" position based on its building block architecture and ecosystem enables it to produce highly customized designs in volumes and at very competitive prices. In addition, Raymond James cites Supermicro's large U.S. footprint relative to other server makers as an advantage in the age of tariffs.

Image source: Getty Images.

Betting on overcoming challenges

Raymond James also points out challenges, especially the current Hopper-to-Blackwell transition in AI GPUs. That was cited by Supermicro management as the reason for the underwhelming March quarter results and June quarter guide, as customers took time to decide which platform to build.

But as long as AI remains a long-term secular theme, Raymond James is betting Supermicro will be able to translate that into growth opportunities, due to its strong competitive position relative to other business models.

Should you invest $1,000 in Super Micro Computer right now?

Before you buy stock in Super Micro Computer, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Super Micro Computer wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $598,613!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $753,878!*

Now, it’s worth noting Stock Advisor’s total average return is 922% — a market-crushing outperformance compared to 169% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of May 12, 2025

Billy Duberstein and/or his clients has positions in Super Micro Computer. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.