Super Micro Computer (SMCI) CEO Charles Liang is planning a massive expansion in Europe amid fast-growing demand for artificial intelligence (AI) infrastructure. SMCI’s servers play a vital role in supporting generative AI models, which are being rapidly adopted around the world. Liang made these bold remarks during an interview with CNBC at the Raise Technology Summit in Paris today.
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The company will bolster its investment in Europe, including accelerating the pace of manufacturing AI servers in the region. SMCI already has a manufacturing base in the Netherlands and could expand to other locations, the CEO added. Liang said in the interview, “But because the demand in Europe is growing very fast, so I already decided, indeed, [there’s] already a plan to invest more in Europe, including manufacturing.”
SMCI Expects Global AI Demand to Surge Ahead
SMCI produces advanced AI servers equipped with Nvidia’s (NVDA) chips. These servers are in high demand because they are used for training and deploying large-scale AI models. The launch of OpenAI’s ChatGPT in 2022 further bolstered demand for Nvidia’s chips and AI servers. Liang believes that there will be even greater demand for AI infrastructure in the coming years. He stated, “The demand is global, and the demand will continue to improve in [the] next many years.”
Despite market concerns about product demand after the company issued lower-than-expected earnings guidance in May, Liang has been vocal in assuaging investor fears regarding SMCI’s growth potential. He said, “Our growth rate continues to be strong, because we continue to grow our fundamental technology, and we [are] also expanding our business scope.” Liang concluded by saying that the room for growth remains tremendous.
The generative AI revolution pushed SMCI’s stock to new highs in 2024, but it was later impacted by the server maker’s financial reporting problems. Nonetheless, SMCI overcame those challenges by filing its delayed annual report for fiscal 2024 in February. Year-to-date, SMCI stock has surged over 61%.
Is SMCI Stock a Buy, Hold, or Sell?
Analysts remain divided about Super Micro Computer’s long-term stock outlook. On TipRanks, SMCI stock has a Moderate Buy consensus rating based on six Buys, six Holds, and one Sell rating. Also, the average SMCI price target of $41.42 implies 15.7% downside potential from current levels.
