5 days ago
Analysts tweak Super Micro stock price target after earnings
Analysts tweak Super Micro stock price target after earnings originally appeared on TheStreet.
Fans of pirate stories are no doubt familiar with the expression "Davy Jones' Locker."
The phrase comes from folk stories about a demonic figure who presides over souls who were lost at sea, but it's typically used to describe the deepest part of the ocean.
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Super Micro Computer () shares might not be that low, but they were seriously under water after the AI-server maker missed Wall Street's fourth-quarter-earnings expectations and fell short of first-quarter forecasts.
The San Jose, Calif., company has been sailing in some pretty rough seas for a while now.
Last August, short-seller Hindenburg Research released a report accusing Super Micro of what it called "glaring accounting red flags, evidence of undisclosed related-party transactions, sanctions violations, and customer troubles."
A day later, Super Micro said it would delay filing its Securities and Exchange Commission Form 10-K for the fiscal year ended June 30.
Super Micro CEO cites revenue growth
In October, Super Micro's then-auditor, Ernst & Young, resigned, citing governance and transparency concerns. Super Micro's special committee of the board later said it found 'no evidence of misconduct' after an investigation.
In December, Super Micro was dropped from the Nasdaq 100 Index and in February, the company reported its financial results just in time to meet the Nasdaq's listing deadline.
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Super Micro CEO Charles Liang told analysts on Aug. 5 that the company's revenue surged 47% from a year earlier.
"This growth reflects continued strong demand for our AI and green computing solutions," he said, "despite the six months cash-flow impact from the delayed filing of our fiscal year 2024 10-K and delayed revenue recognition from a major new large partner."
Liang said earnings per share fell 50% from a year earlier, due primarily to the impact of the Trump administration's tariffs. "Although, we had taken measures to reduce the impact, and we will see their results," he said.
During the call, Liang discussed the company's strategy for competing in the AI server market.
"We can grow much quicker if we don't care about the gross margin and net margin," he said. "And that's why we introduced the DC PPS, data center billing box solution. That's a total solution to support the customer to build a data center quicker, better, and also save money, more reliable."
"And we provide all the infrastructure (needed), including on-site deployment, networking, cabling," Liang added. "We are able to provide a better value to the customer, not just the price war."
Analyst: Super Micro falling short of targets
Super Micro's shares are up nearly 50% this year, but stock was off 20.5% at last check.
Investment firms expressed disappointment with the company's earnings of America Securities analyst Ruplu Bhattacharya raised his price target on Super Micro to $37 from $35 and affirmed an underperform rating on the shares.
Gross margins were hurt again this quarter from inventory reserves for older generation products, as some customers chose to wait for the next generation Nvidia () B300/GB300 GPUs, the analyst wrote.
'[This] can be an issue in future quarters as well, as Nvidia and AMD will continue to launch new GPUs with step function changes in functionality," Bhattacharya said in a research note.
"In our opinion, some customers who spend a lot on data center racks may elect to wait to get the best functionality for their money, if their schedule can allow for it. SMCI will thus need to manage working capital efficiently and ensure that it does not overbuild older generation racks."
In addition, the analyst said, in the fiscal fourth quarter a major new customer had specification changes that delayed revenue recognition. Management also highlighted a constraint on capital that limited Super Micro's ability to scale production in that quarter
The analyst's fiscal 2026 revenue forecasts moved higher to $33.1 billion, in line with the company's outlook, but Bhattacharya also sees competitor Dell Technologies () gaining market share in AI servers.
JP Morgan analyst Samik Chatterjee lowered the investment firm's price target on Super Micro to $45 from $46 and maintained a neutral rating on the shares, according to The Fly.
.The company's fiscal Q4 results missed expectations due to capital constraints and customer indecision, Chatterjee said.
The firm said the quarter was another example of Super Micro's execution falling short of management's tweak Super Micro stock price target after earnings first appeared on TheStreet on Aug 6, 2025
This story was originally reported by TheStreet on Aug 6, 2025, where it first appeared.
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