The share price of Super Micro Computer (NASDAQ: SMCI) has extended its recent winning streak, with investors reacting positively to a favorable outlook for the firm’s liquid-cooled technology prospects.
As of press time, SMCI stock was valued at $38.10, surging by 14.35% from the close of the last trading session.
This momentum has propelled the former artificial intelligence (AI) darling to extend its gains on the weekly timeframe, where it is up over 18%.
Why Supermicro is rising
It’s worth noting that the stock showed strong momentum during the January 3 session despite the absence of any major news driving the positive movement. By January 4, investors seemed to be reacting to positive sentiment from a Lynx Equity analyst note on the stock.
Picks for you
In the note, the analyst reiterated the $60 price target, representing an upside of 57% from SMCI share’s current valuation.
The financial institution cited the Nvidia (NASDAQ: NVDA) keynote at CES as a potential positive catalyst. Media reports suggest the keynote will address the next-generation GB300 platform, which may require even more advanced cooling solutions than its predecessor, GB200.
Lynx remains bullish on SMCI, highlighting its early advantage in liquid-cooled technology and positioning it for success as demand for more efficient cooling in next-gen platforms grows.
“A core element of our positive thesis on SMCI is our belief that the company has had a head-start in liquid-cooled technology over its peers, a position we believe it is in no danger of losing in the foreseeable future,” the analyst affirmed.
The firm believes SMCI could benefit from Nvidia’s upcoming Blackwell launch and AMD’s MI325X and Google’s TPU6 ramps, both of which require liquid cooling solutions.
SMCI’s potential risks
The report also acknowledged potential concerns regarding the company’s financial filings. As things stand, SMCI faces pressure to meet filing deadlines in less than two months, and there are concerns about its potential need to raise capital.
Despite this, Lynx views the need for fresh liquidity as an opportunity to address the company’s large inventory and strengthen working capital for its AI server business.
As a reminder, Super Micro continues to face the risk of being delisted from the Nasdaq due to its failure to file annual accounts for the fiscal year ending June 30.
The company’s troubles escalated after its former auditor, Ernst & Young, resigned in October, citing concerns about potential weaknesses in its accounting controls.
However, an internal investigation revealed no evidence of fraud, and Super Micro appointed BDO as its new auditor last month to replace EY.
Featured image via Shutterstock
