Key insights
- Mizuho lowered its price target for Super Micro Computer due to near-term risks, including potential order shifts to Dell and legal issues related to export controls to China. Despite strong long-term AI server demand, SMCI faces competitive pressures and legal headwinds. The analyst also raised Dell's estimates, suggesting a preference for Dell in the near term. The legal issues add uncertainty, negatively impacting investor sentiment.
Investing.com - Mizuho lowered its price target on Super Micro Computer shares (NASDAQ:SMCI) to $25 from $33 while maintaining a Neutral rating on Monday. The stock currently trades at $23.22, below InvestingPro’s Fair Value of $32.45, suggesting the shares may be undervalued despite near-term headwinds.
The firm sees strong AI server demand for 2026-27, with Nvidia data center revenues tracking up more than 50% year-over-year in 2027. Major cloud service provider capital expenditure is estimated at $689 billion for 2026, up 64% year-over-year, with 2027 consensus estimated at $811 billion, up 18% year-over-year.
Super Micro Computer continues to be an AI server technology leader with strong AI server capital expenditure tailwinds into 2027, Mizuho said. The company posted 34.76% revenue growth over the last twelve months, though its gross profit margin of just 8% remains a competitive weakness. Near-term headlines with China could shift orders to Dell, the firm noted.
Dell has a 10 times bigger AI service team and could see upside to its roughly $85 billion pipeline, according to Mizuho. AI server spend overall remains strong at 44% compound annual growth rate from 2024 to 2029 to approximately $862 billion, with 2029 AI server shipments raised to 5.67 million units from a prior 3.67 million units.
Mizuho raised its Dell estimates and price target to $215 while lowering its Super Micro Computer price target to $25 given some near-term challenges.
In other recent news, Super Micro Computer Inc. has been at the center of legal and financial scrutiny. The company’s co-founder, Yih-Shyan "Wally" Liaw, pleaded not guilty to charges of illegally diverting Nvidia-powered servers to China, which allegedly violated U.S. export controls. This legal issue has sparked a class action lawsuit by shareholders in California, who claim that Super Micro concealed violations of export laws and misled investors about its compliance practices.
Financial analysts have reacted to these developments by adjusting their outlooks. Rosenblatt has lowered its price target for Super Micro from $50 to $32, though it maintains a Buy rating, citing the controversy surrounding the indictment. Similarly, BofA Securities reduced its price target from $34 to $24, retaining an Underperform rating amid the ongoing export probe. Meanwhile, Bernstein SocGen Group has reiterated a Market Perform rating with a $37 price target, as the indictment involves key figures associated with the company. These recent developments have placed Super Micro under significant scrutiny from both legal and investment communities.
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