Super Micro Computer stock price target raised to $52 from $37 at Citi

Investing.com - Citi has raised its price target on Super Micro Computer (NASDAQ:SMCI) to $52.00 from $37.00 while maintaining a Neutral rating on the stock. According to InvestingPro data, SMCI currently trades at a P/E ratio of 25.71x, suggesting a premium valuation relative to its near-term earnings growth potential.

The firm expects Super Micro Computer to announce its financial results in early August, noting continued broader industry demand, though it characterizes this demand as "lumpy."

Citi points to the significant ramp-up of GB200/300 products that began in May and growing demand in the sovereign and enterprise AI markets as positive factors for the company.

The research firm indicates that Super Micro’s management appears optimistic about fulfilling current commitments over the next two quarters as constraints on Blackwell GPU supply ease.

Despite growth expectations, Citi expresses concerns about margins due to increased competitive efforts from DELL and HPE, which it believes will limit margin expansion, while the higher price target reflects an increase to a 13.5x P/E multiple from 9-10x previously.

In other recent news, Super Micro Computer announced the pricing of $2 billion in convertible senior notes due 2030, with the option for initial purchasers to acquire an additional $300 million in notes. The company plans to use the proceeds for general corporate purposes, including funding working capital for growth and business expansion. In a related development, Supermicro intends to enter into capped call transactions to reduce potential dilution upon conversion of the notes. Meanwhile, Supermicro’s BigTwin server has received industry immersion cooling certification from Intel (NASDAQ:INTC), which ensures efficient performance in dielectric fluid environments, reducing energy requirements for data centers.

Additionally, KeyBanc initiated coverage on Super Micro Computer with a Sector Weight rating, citing the competitive nature of the server market and potential pressure on the company’s profitability. The firm expressed concerns about Super Micro’s growth deceleration and its current valuation. Mizuho (NYSE:MFG) raised its price target for Super Micro Computer to $47, maintaining a Neutral rating, while adjusting its fiscal 2026 and 2027 revenue and earnings estimates. The firm highlighted strong AI server demand and robust cloud service provider orders as factors influencing its revised outlook.

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