The notion of using liquid as a coolant in technology isn’t new. After all, everything from engines to machine guns have used liquid cooling for decades now. But it’s a little something new for Super Micro Computer (NASDAQ:SMCI), and it was big enough to send shares surging nearly 5% in Wednesday afternoon’s trading.
Super Micro’s plan to use direct liquid cooling technology in server racks makes sense, and that’s why it’s poised to bring the cooling system to nearly a third of its racks next year. That, in turn, is likely to make data centers more efficient and, accordingly, cost less to operate. That’s got to be welcome news, especially given how data centers, in general, are on the rise thanks to the growth of artificial intelligence (AI) and other such use cases.
But that’s where Super Micro can really step in; while at Computex 2024, Super Micro’s Charles Liang noted that 15% of new data centers worldwide would turn to its direct liquid cooling technology, and that would double to 30% the year immediately after.
More than Fancy Coolant Systems
The cooling systems alone might have been worth a notice, but Super Micro is packing steak behind its sizzle. Just two days ago, it showed off a string of new developments, focused mainly on new servers using Xeon 6 processors, complete with E-cores. This includes not only edge servers but also multi-node and rackmount systems. The servers will boast models for every layer of demand, starting with entry-level and working all the way up to full enterprise use.
Is SMCI Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on SMCI stock based on six Buys and four Holds assigned in the past three months, as indicated by the graphic below. After a 247.43% rally in its share price over the past year, the average SMCI price target of $1,098 per share implies 36.79% upside potential.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
