JP Morgan Believes Super Micro Computer (SMCI) Lags Behind Dell in Performance

This content is not intended as investment advice. The author has no stake in any of the stocks discussed herein.

Super Micro Computer’s Stock Scenario

Super Micro Computer (NASDAQ: SMCI), a leading provider of servers and liquid-cooled AI racks, has recently witnessed a sharp decline in its stock value, plummeting approximately 30% in the last month. This downturn appears to be closely linked to fluctuations in the stock price of its key client, NVIDIA. Nonetheless, JP Morgan has issued a more favorable outlook for Super Micro, though it remains less optimistic compared to rival Dell’s standing in the industry.

JPMORGAN UPGRADES $SMCI TO NEUTRAL FROM UNDERWEIGHT, SAYS “CYCLED PAST THE UNCERTAINTY IN RELATION TO PENDING SEC FILINGS, ”RAISES PT TO $45 FROM $35

Analyst comments: “We are upgrading shares of Super Micro as the company has cycled past the uncertainty in relation to pending…

— Wall St Engine (@wallstengine) March 21, 2025

JP Morgan’s Upgrade: What It Means

Recently, JP Morgan upgraded Super Micro Computer from an ‘Underweight’ rating to ‘Neutral’ and raised its stock price target from $35 to $45. Analyst Samik Chatterjee noted that Super Micro has navigated past the uncertainties associated with its pending SEC filings and is poised to take advantage of rising demand for its Blackwell-based server shipments, which show a significant increase in market interest compared to their earlier generation.

Recovery and Challenges Ahead

For those unfamiliar, Super Micro successfully avoided a potential delisting in February by submitting its annual report for FY 2024 just before a critical Nasdaq deadline. This timely filing was crucial, especially following damaging accusations from Hindenburg Research in August 2024, which suggested severe accounting issues within the company. In response, Super Micro paused all financial submissions to the SEC to facilitate a thorough audit of its internal controls.

As JP Morgan projects robust revenue growth for Super Micro in upcoming quarters, they do express apprehension regarding prospective margin challenges. These arise amid a highly competitive market landscape, which may lead to aggressive pricing strategies and pressure on profit margins. Additionally, Super Micro faces increased expenses due to recommended enhancements in internal controls.

Future Outlook and Comparisons

JP Morgan anticipates that Super Micro will experience margin moderation in FY26 relative to FY25, which may restrain earnings per share (EPS) growth compared to overall revenue growth. Notably, the projected stock price target of $45 represents a valuation multiple of 10x earnings, indicative of a conservative stance compared to the 11x multiple assigned to Dell shares by the same bank. This suggests that while JP Morgan recognizes Super Micro’s potential, it still does not view the company as equating to Dell’s valuation, which may signal caution for investors.

For ongoing updates and detailed analyses, consider following reliable financial news sources and market trends closely.

Source & Images