Super Micro Computer (SMCI), a company that builds servers used in artificial intelligence, announced on Wednesday that it has created a new subsidiary specifically for U.S. federal agencies. The goal is to help the government become more efficient by using AI, and it comes after the White House ordered agencies in April to develop AI strategies. As a result, shares of Super Micro Computer are up at the time of writing.
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Interestingly, it is worth noting that some agencies, like the Federal Aviation Administration, are already using AI to review safety incident reports and assess risks. At the same time, other government departments are trying to automate repetitive administrative and logistical tasks in order to save time and resources.
In addition, according to CEO Charles Liang, the company will provide complete IT solutions to federal agencies using equipment manufactured and tested in its Silicon Valley facilities. The news comes just a day after CoreWeave (CRWV), a cloud services provider, also announced plans to enter the U.S. federal market. Moreover, to meet the growing demand, Super Micro is looking into new manufacturing locations within the U.S.
Is SMCI Stock a Good Buy?
Turning to Wall Street, analysts have a Hold consensus rating on SMCI stock based on four Buys, eight Holds, and three Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average SMCI price target of $44.15 per share implies 17.4% downside risk.
