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Super Micro Computer (NASDAQ: SMCI), a prominent retailer of servers and liquid-cooled AI racks, has seen its share price plummet by ~30 percent over the past month, largely in affinity with its major customer, NVIDIA. Yet, JP Morgan believes there is cause for optimism, just not as much as that around SMCI's major competitor, Dell.
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
To wit, JP Morgan has now upgraded Super Micro Computer shares to a 'Neutral' rating from an 'Underweight' one, and hiked its stock price target for the company to $45 from an earlier peg at $35 per share.
JP Morgan analyst Samik Chatterjee concedes that Super Micro Computer has "cycled past the uncertainty in relation to pending SEC filings and is on the cusp of benefiting from the ramp in Blackwell-based server shipments, which are already seeing materially higher demand than the prior generation, with additional benefit from higher ASPs."
For the benefit of those who might not be aware, Super Micro Computer managed to avoid a delisting of its shares earlier in February by filing its requisite annual report for FY 2024 just minutes ahead of a looming deadline from the Nasdaq exchange. A damning report from Hindenburg Research in August 2024 had alleged widespread accounting malfeasance at the firm, prompting SMCI to halt all financial filing activity with the SEC in a bid to conduct an extensive internal control audit.
Coming back, while JP Morgan expects Super Micro Computer to post "strong revenue progression" in the quarters ahead, the Wall Street titan remains concerned about the company's margin trajectory "as an increasingly competitive landscape drives aggressive pricing and gross margin pressures, along with elevated expenses related to recommended improvements in internal controls."
Accordingly, the bank expects SMCI to undergo "margin moderation in FY26 over FY25, which could limit EPS growth relative to revenue growth."
Finally, do note that JP Morgan's stock price target of $45 for Super Micro Computer implies an earnings multiple of 10x vs. the 11x multiple that the bank uses to value Dell shares. This shows that the Wall Street titan still does not think SMCI deserves a Dell-like valuation multiple.
