Super Micro Computer (SMCI) stock gained nearly 18% yesterday, ahead of its most anticipated Q2 FY25 results. The question remains if SMCI will be able to leave behind its audit and financial reporting issues and impress the markets with spellbinding results. In the past five trading sessions, SMCI stock has zoomed over 53%, an impressive rally for a stock that faces potential delisting pressure from Nasdaq. However, Wall Street’s average price target indicates downside risk in SMCI stock.
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Notably, February 11 is an important day for SMCI, as it can reinforce the company’s fate as one of the most important AI (artificial intelligence) plays despite ongoing challenges. Investors and analysts hope for more clarity on the filing of its delayed Fiscal 2024 annual report. Nasdaq has given time until February 25 to file the report, failing which, SMCI faces a potential delisting from the exchange.
Analysts Grow Optimistic Ahead of Earnings
Interestingly, two analysts seem to be optimistic about Super Micro Computer stock’s trajectory, heading into its Q4 earnings. On February 10, CFRA analyst Shreya Gheewali upgraded SMCI stock to Buy from Hold. The analyst believes that SMCI is capable of improving its margins to the mid-teens and expanding its market share in the near term, thanks to its accelerated development and growing product offerings. The analyst is confident about SMCI maintaining its leadership position in the liquid cooling technology and advanced servers that run Nvidia’s (NVDA) Blackwell B200 rack solutions.
Meanwhile, Wedbush analyst Matt Bryson believes that SMCI’s delisting pressure is minimal because it could either successfully file its annual report by February 25 or seek a 180-day extension to file its delayed 10K. However, Wedbush is skeptical about SMCI losing some valuable AI server orders to rivals such as Hewlett Packard Enterprise (HPE) owing to its current distractions. Bryson kept his Hold rating and $24 price target on SMCI stock, implying 43.7% downside potential from current levels.
At the same time, Loop Capital analyst Ananda Baruah lifted the price target on SMCI to $40 (6.2% downside potential) from $35 and kept a Buy rating. The analyst highlighted SMCI’s strong fundamentals and important positioning in the AI market, backed by two of its large customers who are expected to ramp up their data center infrastructures shortly.
Is SMCI a Good Buy?
Overall, Wall Street prefers to remain on the sidelines on SMCI stock until the dust settles. On TipRanks, SMCI stock has a Hold consensus rating based on two Buys, three Holds, and one Sell rating. The average Super Micro Computer price target of $29.75 implies 30.3% downside potential from current levels. In the past year, SMCI stock has lost 44.8%.
