JP Morgan Discusses Super Micro Computer (SMCI): “It’s Probably Too Soon to Back” a Positive Forecast, Increases Stock Price Target Yet Keeps ‘Underweight’ Rating

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Super Micro Computer Sees Positive Outlook Despite Caution from JP Morgan

Super Micro Computer (NASDAQ: SMCI), a key player in the server and liquid-cooled AI rack industry, delivered a double surprise to investors recently. The company not only elevated its financial forecast for FY 2026 beyond market expectations but also assured compliance with Nasdaq’s impending deadline for filing overdue financial statements, alleviating concerns about a potential de-listing.

Analyst Revisions Amid Optimism

Following this news, JP Morgan analyst Samit Chatterjee raised the price target for SMCI shares from $23 to $35. Despite this upward revision, JP Morgan has retained an ‘Underweight’ rating on the stock, asserting that it may still be premature to adopt a more bullish stance.

Factors Influencing Cautious Outlook

Chatterjee acknowledged that Super Micro’s updated projections for the fourth quarter of fiscal 2025 and FY 2026 surpass both JP Morgan’s and market consensus estimates, providing an encouraging surprise amid what appears to be a challenging short-term landscape. However, he emphasized that the visibility concerning the alleviation of supply chain constraints, particularly for next-generation GPUs, remains limited.

Increased competition also poses a significant hurdle for Super Micro Computer, as rival companies fortify their offerings. This competitive pressure could weigh heavily on the company’s pricing and margin strategies. Chatterjee pointed out existing concerns regarding margins expressed by peers in the industry, further complicating the outlook for Super Micro.

“Separately, Super Micro provided an update relative to its regulatory filings in which it now expects to complete the FY24 audit by the February 25th filing extension date that was granted by NASDAQ.”

JP Morgan’s Summary on Revenue Outlook

In summarizing the situation, the analyst noted,

“When we take all of the above into consideration, we find ourselves tweaking our near-term revenue forecast lower, but our out-year revenue outlook higher; albeit, below management’s strong expectations, and with our earnings outlook rising more modestly than revenue as we embed our expectation for early margin pressure associated with the initial ramp of the new AI Server offerings.”

Other Analysts Join in Raising Price Targets

In a similar vein, Wedbush recently increased its price target for Super Micro shares to $40, up from an earlier baseline of $24. Furthermore, Loop Capital has made its second price target adjustment in just three weeks, now projecting a target of $50, previously set at $40 per share.

Ananda Baruah of Loop Capital reiterated his bullish sentiment, stating:

“SMCI remains an important company in an important space with both special situation catalysts (i.e., getting SEC filing current) and fundamental as GB200 & GB300 (Blackwell) ramp heading into summer and key customers get into full swing (Tier 2 CSPs).Additionally, SMCI’s two largest customers have huge plans for 2025, and we believe it is inevitable that SMCI benefits.”

Current Market Reaction

As of this writing, Super Micro Computer shares have risen by 10 percent in pre-market trading, reflecting positive investor sentiment following this series of updates.

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