Shares of Super Micro Computer (SMCI) took a hit on Thursday after Barclays resumed coverage of the AI server company with a Hold rating due to some concerns about its growth prospects. Specifically, 4.4-star analyst George Wang warned about the “limited visibility” for AI server builds, particularly for those that are tied to Nvidia’s (NVDA) Blackwell offerings.
Wang’s concerns about Super Micro Computer’s growth potential boil down to two main issues. The first one is that the company’s edge in AI servers is shrinking as competitors close the gap. The second issue is that the lower-margin AI server business might limit how much investors are willing to pay for the stock.
Looking ahead, Wang expects Super Micro Computer to face some margin pressure as it ramps up production for the initial Blackwell cycle. The company’s reliance on Nvidia’s NVL72 GB200/300 racks might also weigh on margins. As a result, Wang thinks that it will be tough for Super Micro Computer to hit its 14-17% gross margin target anytime soon. Interestingly, though, the analyst assigned a $59 price target, which is actually one of the higher price targets among analysts and above the consensus estimate.
Is SMCI Stock a Good Buy?
Overall, analysts have a Hold consensus rating on SMCI stock based on three Buys, three Holds, and two Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average SMCI price target of $45.14 per share implies less than 1% upside potential.
