Goldman Sachs Just Slashed Its Rating on Super Micro Computer Stock. How Should You Play SMCI Here?

Goldman Sachs Just Slashed Its Rating on Super Micro Computer Stock. How Should You Play SMCI Here?

  • 25.03.2025 02:17
  • theglobeandmail.com
  • Keywords: AI, Market Share

Goldman Sachs downgraded Super Micro Computer (SMCI) stock to "Sell," forecasting a 23% decline due to competition and valuation concerns, while other analysts remain bullish with a higher price target.

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Estimated market influence

Goldman Sachs

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Analyst rating:

Downgraded Super Micro Computer stock to 'Sell' and reduced price target.

Super Micro Computer (SMCI)

Negativesentiment_dissatisfied
Analyst rating: N/A

Facing intense competition, potential revenue drop, and gross margin contraction.

Context

Analysis of Goldman Sachs Downgrade on Super Micro Computer (SMCI)

  • Goldman Sachs downgraded SMCI stock to "Sell" with a price target of $32, implying a potential 23% decline from current levels.
  • The downgrade was driven by intense competition from rivals investing aggressively in R&D, leading to less differentiation in products.
  • Super Micro's market share is expected to face pressure, casting doubt on its $40 billion revenue target for fiscal 2026.
  • SMCI stock is trading at ~16x estimated earnings for 2025, which Goldman Sachs analyst Michael Ng deems an "unfavorable" risk-reward ratio.
  • Gross margins are projected to contract to 12.2% in 2023 and further decline to 11.7% in 2026, driven by investments in new features.
  • Goldman Sachs' bearish stance contrasts with the consensus rating, which remains at "Hold" with a mean target of ~$58, suggesting potential upside of ~40% from current levels.