Wedbush analyst Matt Bryson maintained Super Micro Computer Inc (NASDAQ:SMCI) with a Neutral rating and raised the price target from $530 to $800.
Bryson noted that Supermicro guided revenues for the year meaningfully higher, suggesting sales momentum is only accelerating into the fiscal fourth quarter. At the same time, the midpoint of management’s guidance implicitly suggests gross margin deterioration of ~200 bps and an operating margin decline of ~100 bps.
The expected dip in margins, in turn, necessarily caters to concerns about how competition might weigh on SMCI’s ability to translate AI-related server growth into profit, both in the current quarter and moving forward, the analyst said. The result mirrors the dichotomy that has kept him on the sidelines regarding SMCI over the past 12 months.
SMCI has successfully changed its narrative from that of a scrappy underdog supplying customers with cheaper and more customized solutions to the leading OEM of AI servers.
SMCI sales momentum is unlikely to diminish over the next few quarters as Nvidia Corp’s (NASDAQ:NVDA) offerings transition to H200 and Blackwell. However, the analyst continues to see the server market as competitive.
Bryson projected fourth-quarter revenue of $5.30 billion (prior $4.81 billion) and EPS of $8.09 (prior $7.04).
BofA Securities analyst Ruplu Bhattacharya reiterated a Buy rating on SMCI with a price target of $1,090.
Super Micro reported fiscal third-quarter revenue slightly below consensus. The analyst noted that the small topline miss was driven by a lack of component availability late in the quarter.
Bhattacharya’s bullish thesis remains intact, ...Full story available on Benzinga.com
Related tickers: NVDA, SMCI, XMMO, IDGT.
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