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SMCI stock upgraded to Neutral at JPMorgan after ‘cycling past’ filing challenges

SMCI stock upgraded to Neutral at JPMorgan after ‘cycling past’ filing challenges

  • 21.03.2025 16:15
  • baystreet.ca
  • Keywords: JPMorgan upgrade, Higher ASPs, Nvidia supply ramp, Price target increase, Revenue growth forecast, Earnings per share (EPS) growth, Market demand for AI servers

JPMorgan upgraded Super Micro Computer (SMCI) stock to Neutral, citing its move past SEC filing challenges and benefits from AI server demand. While revenue growth is expected, margin pressures and ongoing issues like DOJ investigations may limit upside.

SMCI NewsSMCIsentiment_satisfiedJPM/PJsentiment_satisfiedNVDAsentiment_satisfiedDELLsentiment_neutral

Estimated market influence

Super Micro Computer

Super Micro Computer

Positivesentiment_satisfied
Analyst rating: Buy

Upgraded to Neutral by JPMorgan, benefiting from cycling past filing challenges and higher ASPs. Anticipated revenue growth driven by Nvidia's supply ramp.

JPMorgan

Positivesentiment_satisfied
Analyst rating: —

Upgraded SMCI stock to Neutral, citing positive developments like higher ASPs and improved supply chain. Raised price target and revenue forecasts.

Nvidia

Nvidia

Positivesentiment_satisfied
Analyst rating: Strong buy

Improved supply ramp supports Super Micro's revenue growth.

Dell

Dell

Neutralsentiment_neutral
Analyst rating: Strong buy

Used as a peer comparison, with a higher multiple due to fewer historical issues compared to Super Micro.

Context

Analysis of SMCI Stock Upgrade by JPMorgan

  • Upgrade Details:

    • JPMorgan upgraded Super Micro Computer (SMCI) stock from Underweight to Neutral.
    • The upgrade reflects the company moving past SEC filing challenges and benefiting from increased demand for Blackwell-based server shipments.

  • Revenue Forecasts:

    • FY26 revenue forecast raised to $39 billion, up from previous estimate of $34 billion.
    • Anticipated year-over-year growth: 65%.

  • Margin Pressures:

    • Gross margin expected to moderate in FY26 compared to FY25, slightly reduced to 11.1% from 11.2%.
    • Potential constraints on operating margin expansion and EPS growth due to competitive market landscape and elevated expenses.

  • Price Target and Valuation:

    • December 2025 price target increased to $45, up from previous target ( undisclosed).
    • Applying a 10x earnings multiple vs. the former 9x multiple.
    • Still discounted compared to peer Dell, which trades at an 11x multiple, due to historical audit issues and ongoing challenges.

  • Key Risks:

    • Working capital challenges anticipated in Q4 FY25 and FY26.
    • Heavy investment in inventory for revenue growth may lead to additional debt raises and increased interest expenses in FY26-FY27.
    • These factors could limit upside to EPS.

  • Competitive Landscape:

    • Benefits from stronger supply ramp from Nvidia (NVDA).
    • Caution regarding margin pressures due to competitive market dynamics.

  • Long-Term Considerations:

    • Ongoing issues such as CFO changes and Department of Justice investigation may weigh on earnings multiple.
    • Historical audit challenges remain a headwind for investor sentiment.