Investing.com -- Super Micro Computer shares were in focus Thursday after Wolfe Research initiated coverage of the AI server maker with a Peer Perform rating, arguing that while the company is well positioned to benefit from surging demand for artificial intelligence infrastructure, a range of operational, financial and regulatory risks could limit upside.

Wolfe said Super Micro has emerged as a major beneficiary of the AI server spending boom, with customers including CoreWeave, xAI and Tesla helping drive rapid growth. The firm remains bullish on the broader AI infrastructure market and believes investors continue to underestimate the long-term size of the opportunity.

However, analysts flagged persistent margin pressure as a key concern, noting that Super Micro has historically prioritized revenue growth over profitability. Customer concentration among large AI infrastructure buyers, competitive pricing dynamics and uncertainty around the company’s newer Data Center Building Block Solutions business could continue to weigh on earnings.

Wolfe also highlighted governance and regulatory overhangs following the U.S. indictment of co-founder Wally Liaw over alleged illegal AI server shipments to China. While Super Micro itself has not been charged and says its relationship with Nvidia remains intact, analysts warned that ongoing investigations and scrutiny could create additional risks for investors. Demand, meanwhile, appears unaffected, with the company reporting record backlog levels.

The brokerage also pointed to dilution concerns after Super Micro unveiled plans to raise roughly $7 billion through a combination of common stock, convertible preferred securities and an at-the-market equity program to fund expansion of its AI server business.

Wolfe forecasts Super Micro will generate about $68.2 billion in revenue and $2.90 in earnings per share by calendar 2028 and estimates a fair value range of $26 to $31 per share. While the firm sees substantial growth potential tied to AI infrastructure spending, it believes the associated risks justify a more cautious stance on the stock.