Super Micro Computer Stock (SMCI) Jumps 8% on JPMorgan’s Rating Upgrade

Super Micro Computer Stock (SMCI) Jumps 8% on JPMorgan’s Rating Upgrade

  • 24.03.2025 03:10
  • markets.businessinsider.com
  • Keywords: success, success

Super Micro Computer (SMCI) stock surged nearly 8% after JPMorgan upgraded its rating to Hold from Sell, citing strong demand for Blackwell-powered servers. However, concerns about gross margins and competition may limit future growth despite positive revenue expectations.

SMCI NewsSMCI ReportsSMCIsentiment_satisfiedNVDAsentiment_satisfied
open_in_newOriginal article

Estimated market influence

Super Micro Computer

Super Micro Computer

Positivesentiment_satisfied
Analyst rating: Buy

JPMorgan upgraded its rating to Hold from Sell, leading to an 8% stock jump. The company is expected to benefit from server shipments powered by Nvidia’s Blackwell platform, with revenue growth and higher ASPs.

Nvidia

Nvidia

Positivesentiment_satisfied
Analyst rating: Strong buy

Nvidia's Blackwell platform is driving demand for Super Micro Computer's servers, leading to increased revenue potential.

Context

Analysis of Super Micro Computer (SMCI) Stock Performance and Market Implications

Key Facts and Data Points

  • Stock Price Movement: SMCI stock jumped nearly 8% following JPMorgan's upgrade.
  • JPMorgan Upgrade Details:
    • Rating upgraded to Hold from Sell.
    • Price target increased to $45 from $35.
  • Year-to-Date Performance: SMCI stock has rallied 38% so far in 2025.
  • Analyst Earnings and Projections:
    • Revenue growth expected to accelerate due to higher demand for Blackwell-based servers.
    • Gross margins expected to moderate in Fiscal 2026 compared to Fiscal 2025.
    • Operating margin moderation anticipated, limiting EPS growth relative to revenue growth.

Market Trends and Business Impact

  • Server Shipments Growth: SMCI is positioned to benefit from a ramp-up in server shipments driven by Nvidia’s Blackwell platform.
  • Demand Dynamics:
    • Blackwell-based servers are experiencing significantly higher demand compared to prior generations.
    • Higher ASP (Average Selling Price) expected to boost revenue growth.

Competitive Landscape and Strategic Considerations

  • Gross Margin Concerns: Heightened competition is expected to pressure SMCI’s gross margins in the near term.
  • Pricing Relative to Peers:
    • New price target reflects a 10x P/E multiple, up from 9x, but still discounts peers like Dell Technologies (trading at 11x).
    • Discount attributed to SMCI’s historical issues with audits, filings, and internal controls.

Long-Term Effects and Strategic Focus

  • Revenue Target: SMCI aims for $60 billion in revenue by Fiscal 2026.
  • Product Innovation: Launching servers based on Nvidia’s Grace CPU Superchip, leveraging Petascale architecture.

Wall Street Consensus

  • Consensus Rating: Moderate Buy (4 Buys, 5 Holds, 1 Sell).
  • Average Price Target: $49.89, implying 18.4% upside potential from current levels.

Analyst Performance

  • JPMorgan analyst Chatterjee:
    • Success rate: 57%.
    • Average return per rating: 10.4% in the past year.

Market Sentiment and Risks

  • Pending Issues: Analyst remains cautious due to pending matters, including:
    • CFO change.
    • DOJ probe resolution.
    • Internal control improvements.

This analysis highlights SMCI’s current momentum, driven by favorable market trends and JPMorgan’s upgrade, while also considering risks related to competition, gross margin pressures, and ongoing corporate governance issues.