Super Micro Computer’s (NASDAQ:SMCI) preliminary December quarter results and lackluster March quarter guidance might not impress at first glance, but don’t let that overshadow the bigger opportunity ahead for this AI server maker.
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That at least is the opinion of Northland’s Nehal Chokshi, an analyst who ranks in the top 1% of Wall Street stock pros.
Chokshi attributes the weak March outlook to a few key factors: delays in Nvidia’s next-gen Blackwell chips and the time SMCI’s GPU-as-a-Service (GPUaaS) clients need to complete their liquid-cooled datacenter buildouts. On top of that, these customers might not be first in line for early Blackwell shipments.
However, Chokshi is confident that these headwinds will clear by the June quarter, a belief reflected in SMCI’s revised FY25 revenue guidance of $23.5 billion to $25 billion. Even at the low end, which suggests June quarter revenues could surge to around $7 billion – well above the ~$5 billion expected for March.
Even better, while gross margins could remain pressured, per the company, revenues in FY26 could reach $40 billion, amounting to ~60% year-over-year growth. In fact, the company said that the $40 billion target is a conservative one, and is based on customer demand, backlog, and commitments.
he 5-star analyst thinks demand for SMCI’s Blackwell rack scale solutions remains robust, thanks to its “significant differentiation.” Chokshi lays out three key reasons backing this view: “(1) commentary from the AMZN 2/6/25 earnings call indicating Blackwell server reliability issues (AMZN does not use SMCI), (2) SMCI’s 2/5/25 press release stating production of Blackwell Rack-Scale production and earnings call statement that SMCI is very confident with the company’s Blackwell rackscale solutions quality and performance and (3) Coreweave’s press release – the company is the first cloud provider to make GB200 NVL72 instances generally available.”
With SMCI positioned to capitalize on the multi-trillion-dollar GenAI boom, the analyst rates SMCI stock an Outperform (i.e. Buy), while raising his price target to $57, implying a 35% upside in the months ahead. (To watch Chokshi’s track record, click here)
2 other analysts sing SMCI’s praises and with an additional 3 Holds and 1 Sell, the consensus view is that the stock is a Moderate Buy. However, the average price target stands at $38.40, suggesting the shares have overshot by 9%. It will be interesting to see whether analysts downgrade their ratings or update their targets shortly. (See SMCI stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
