Analysts have adopted a more cautious stance on Super Micro Computer, Inc. (NASDAQ: SMCI) despite ongoing demand for AI infrastructure products. The company’s latest fiscal first quarter results revealed earnings and revenue figures that fell short of Wall Street expectations, raising some concerns about its near-term performance.
SMCI reported adjusted earnings per share of $0.35, below analyst estimates of $0.40. Revenue amounted to $5.02 billion, which missed consensus estimates of $6 billion. Goldman Sachs highlighted that customer deliveries expected in the first quarter were deferred to the following quarter as clients upgraded their hardware designs.
Goldman Sachs analysts noted, “SMCI’s F1Q26 EPS of $0.35 missed guidance for $0.40-$0.52 on a previously announced revenue miss driven by deliveries pushed from F1Q to F2Q as customers upgrade their designs.” They also indicated that second-quarter guidance expected revenue to roughly double sequentially, but this growth would be partially offset by an approximate 300 basis points decline in gross margins.
Investor caution is also reflected in ratings from major financial institutions. Goldman Sachs maintains a Sell rating on the stock, citing worries about long-term profitability amid intensifying competition within the AI server market. Similarly, Bank of America assigned an Underperform rating with a price target of $34, emphasizing the challenges SMCI faces despite its strengths.
Bank of America analysts acknowledged SMCI’s competitive advantages, including its substantial manufacturing capacity and ability to ship thousands of liquid-cooled racks per month. However, they warned, “the AI server market is very competitive and large deals typically come with lower margins as it’s a competitive bidding process.”
Super Micro Computer is known for designing and manufacturing high-performance server and storage solutions tailored for data centers, cloud computing, AI workloads, and edge computing applications worldwide. While the company is well positioned within these growth areas, analysts believe other AI stocks may offer superior upside potential with reduced downside risk.
Summarizing the analyst sentiment:
1. Earnings and revenue for the latest quarter fell short of projections due to delivery delays.
2. Expected sharp revenue growth next quarter will face margin pressures.
3. The competitive landscape pressures profitability and drives tighter margins on large deals.
4. SMCI’s operational scale and manufacturing capabilities remain strong.
5. Analysts express reservations about the stock’s long-term valuation and growth prospects.
Investors evaluating SMCI should weigh these cautious analyst perspectives alongside the company’s fundamental capabilities in the AI infrastructure sector. The challenging margin environment and competitive dynamics are key factors shaping a more guarded outlook despite solid demand trends.
Read more at: finance.yahoo.com
