- Super Micro Computer Inc. (SMCI) has overcome past turbulence by submitting overdue reports and regaining Nasdaq compliance, with analyst Nehal Chokshi viewing its financials as highly trustworthy, paving the way for a focus on future growth.
- SMCI’s competitive edge in GenAI servers, driven by Direct Liquid Cooling technology and its modular Building Block Architecture, positions it to achieve a $40 billion revenue target by FY26, though Chokshi conservatively estimates a minimum of $30.9 billion.
- Despite a projected 12% decline to 6% growth in the March quarter due to delayed access to Nvidia’s Blackwell GPUs, Chokshi rates SMCI as ‘Outperform’ with a $70 price target, implying an 46% upside from its current $37.5 share price.
Super Micro Computer Inc. (SMCI) is at a critical juncture, with its shares down nearly 66% year-over-year and currently trading at $37.50, reflecting a 2.01% drop amid a broader market downturn. Yet, beneath this surface-level dip lies a narrative of strength, strategic positioning, and forward-looking optimism that has captivated analysts like Nehal Chokshi of Northland, a top-tier Wall Street expert. Chokshi’s recent engagement with SMCI’s investor relations team has shed light on the company’s trajectory, particularly as it emerges from a turbulent period that began in August of the previous year. That stretch was marked by uncertainty, culminating in the submission of overdue reports—a milestone that restored Nasdaq (^IXIC) compliance and, in Chokshi’s view, transformed the company’s outlook. He asserts that SMCI’s financials now carry a “high degree of certainty,” a foundation that allows investors to shift their focus from past struggles to future potential.
Looking forward, SMCI’s guidance for the March quarter projects a range of 12% decline to 6% growth compared to the prior quarter. This tempered outlook stems from its GPU-as-a-Service customers missing out on early access to Nvidia’s cutting-edge Blackwell GPUs. Chokshi points out that Nvidia’s (NVDA) January quarter shipments likely prioritized hyperscalers, a segment SMCI and competitors like Dell Technologies (DELL) don’t typically dominate. He also highlights an eight-week lag between Nvidia’s revenue recognition and when server OEMs like SMCI reflect those gains, a dynamic mirrored by Dell’s flat sequential forecast for its servers and networking business in the April quarter. This alignment with SMCI’s midpoint guidance underscores a broader industry rhythm that the company navigates with precision.
What sets SMCI apart, however, is its competitive edge in the rapidly evolving GenAI server market. Industry insights suggest that its early adoption of Direct Liquid Cooling (DLC) technology and its modular Building Block Architecture provide a distinct advantage. These innovations position SMCI to capitalize on the growing demand for efficient, scalable solutions in artificial intelligence infrastructure. Chokshi sees this strength driving a return to share gains by the September quarter of FY26, supporting the company’s bold $40 billion revenue target for FY26—a 65% jump from FY25’s midpoint guidance. While he conservatively pegs his own estimate at $30.9 billion as a floor, he deems the higher goal “reasonable,” reflecting confidence in SMCI’s execution.
With compliance regained and its technological prowess in focus, Chokshi has upgraded his price target from $57 to $70, tying the Street-high mark and signaling an 18.6% upside potential. His ‘Outperform’ rating encapsulates a belief that SMCI is not merely weathering the storm but steering toward a leadership role in the GenAI landscape, bolstered by trust in its financials and a clear vision for growth.
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