12-07-2025
Citi raises Super Micro target, but warns on margin pressures
-- Citi raised its price target on Super Micro Computer (NASDAQ:SMCI) to $52 from $37 a share in a note Friday, citing improving demand for AI servers and the ramp of Nvidia's GB200/300 platforms.
However, the bank kept a Neutral rating on the stock, pointing to increasing competitive pressure from Dell (NYSE:DELL) and HPE.
'Management sounds constructive on materialization of current commitments over the next two quarters as Blackwell GPU supply constraints ease,' Citi analysts wrote.
However, they added, 'We remain concerned on margins given increased momentum and competitive efforts by DELL and HPE, which we believe will temper margin expansion expectations.'
Super Micro is expected to report fiscal fourth-quarter results in early August. Citi forecasts revenue of $6.07 billion, up 13.4% year over year and 32% quarter over quarter, and EPS of $0.45, roughly in line with consensus.
For the first quarter of fiscal 2026, Citi estimates revenue of $7.02 billion and EPS of $0.65, both above the Street.
Citi also highlighted several key focus areas for investors: '1) Global manufacturing footprint amidst tariff implications; 2) Hopper to Blackwell GPU platforms transition; 3) Ability (OTC:ABILF) to deliver on their first-to-market advantage for new GPU platforms amidst increased competitive environment; and 4) DCBBS and DLC 2 emergence and ramp into 2H.'
While raising its price target on improved market multiples and peer valuation trends, Citi reiterated that 'we remain Neutral on the name amidst continued broader industry demand (albeit lumpy).'
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