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Super Micro Computer (NASDAQ: SMCI) completed a 10-for-1 stock split in October 2024, and Arista Networks (NYSE: ANET) completed a 4-for-1 stock split in December 2024. Interestingly, neither stock has beaten the S&P 500 (SNPINDEX: ^GSPC) since the splits were announced, which is somewhat atypical.
Since 1980, stocks that split have outperformed the benchmark index by an average of 13 percentage points during the year following the announcement. However, certain Wall Street analysts anticipate big gains for Supermicro and Arista shareholders during the next 12 months, as detailed below:
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Ananda Baruah at Loop Capital recently raised the target price on Supermicro to $70 per share, which implies 105% upside from the current share price of $34.
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Ryan Koontz at Needham recently reiterated his target price on Arista at $145 per share, implying 85% upside from the current share price of $78.
Here's what investors should know about these artificial intelligence stocks.
Super Micro Computer builds data center servers, including liquid-cooled server racks optimized for artificial intelligence (AI). Internal manufacturing capabilities and a modular approach to product development have helped the company secure a leadership position in AI servers, a market forecast to grow at 30% annually through 2033, according to Statista.
Last year, Hans Mosesmann at Rosenblatt wrote, "Super Micro has developed a model that is very, very quick to market." Due to its use of common electronic building blocks across different product lines, which can rapidly be assembled into servers with various specifications, the company also usually has the widest portfolio of products when Nvidia, AMD, or Intel releases a new chip.
However, other analysts argue that there is nothing unique or innovative about Supermicro. The company simply builds servers with chips and hardware purchased from other suppliers. "Super Micro doesn't really do the innovation. They are a contract manufacturer with willingness to commit working capital. Most of the innovation is done upstream," says Mehdi Hosseini at Susquehanna.
Supermicro recently regained compliance with Nasdaq filing requirements. Last year, a short seller accused the company of accounting manipulation, setting in motion a series of events that delayed its Form 10-K for fiscal 2024 and Forms 10-Q for the first and second quarters of fiscal 2025. However, the audit discovered no evidence of fraud or misconduct, and the company submitted the forms before the deadline in February.