Super Micro Shows Margin Weakness Despite Strong AI Demand: Analyst
Super Micro Computer, Inc (NASDAQ:SMCI) shows margin weakness despite strong artificial intelligence demand.
The company’s stock plummeted in pre-market trading and continues to dip, currently trading at $496.83 per share, down 19.47% at last check Wednesday.
- Bank of America Securities analyst Ruplu Bhattacharya downgraded the rating on Super Micro Computer from Buy to Neutral with a price target of $700, down from $1,090.
- Goldman Sachs analyst Michael Ng reiterated a Neutral rating on Super Micro with a price target of $675, down from $775.
- KeyBanc analyst Thomas Blakey reiterated a Hold rating on Super Micro.
- JPMorgan analyst Samik Chatterjee maintained an Overweight rating with a price target of $950.
Check out other analyst stock ratings.
BofA Securities: Fourth-quarter revenues were in line with Bhattacharya and Street estimates despite $800 million of pushout into the first quarter due to the non-availability of components related to liquid cooling.
The analyst said the revenue guide for the first quarter is higher, and the revenue guide for fiscal 2025 is meaningfully higher ($28 billion at the mid-point, versus Bhattacharya and Street estimates at $25.1 billion and $23.8 billion), which indicates that AI-related demand remains strong.
However, the fourth-quarter gross margin was much lower than expected (11.3% versus Bhattacharya’s 13.6%), given customer mix and ramp costs related to liquid cooling.
Bhattacharya flagged that despite overall higher revenue in fiscal 2025, gross margins will only gradually return to the normal range (14%-17%) …
Full story available on Benzinga.com