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Shares of Super Micro Computer Inc. were falling 2.5% in recent trading, after Mizuho analyst Vijay Rakesh initiated coverage of the AI server market leader with a neutral rating, and a $450 stock price target.
Rakesh is worried about falling market share and gross margins, as competition from conventional servers providers, like Dell Inc., increases. He noted that Super Micro had 80% to 100% of the AI server market in 2022 to 2023, but said that will be down to about 40% to 50% this year.
“While [Super Micro] has benefited from a first-mover advantage and favorable [graphics processing unit] allocation in a tight market, we believe server architectures have relatively low differentiation and barriers to entry,” Rakesh wrote.
Meanwhile, he started Dell’s stock with an outperform rating and a $135 price target. And it was up 0.4% in recent trading.