Super Micro Computer Inc SMCI appears to be basking in the glow of the artificial intelligence (AI) market explosion.

The San Jose, California-based company is expected to experience substantial revenue growth in the coming years, driven by the burgeoning demand for AI, as per analysis by BofA Securities.

Analyst Insight: BofA Securities analyst Ruplu Bhattacharya has initiated coverage of Super Micro Computer with a Buy rating and a price target of $1,040.

The Growth Potential: The company is bolstering its backlog and scaling its capacity to support robust revenue expansion, Bhattacharya stated in the initiation note.

Over 50% of Super Micro Computer’s revenues are now linked to accelerators such as GPUs, the analyst highlighted.

Bhattacharya posited that the AI server market is far larger than commonly perceived, potentially growing at a 50% CAGR over the next three years, in contrast to the historical 5.5% for the overall server market over the past 17 years. He further contended that Super Micro Computer’s revenues could grow at an even faster clip, leading to market share gains.

SMCI Stock Movement: Shares of Super Micro Computer had surged by 9.27% to $962.17 at the time of publication on Thursday.