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'The Switzerland of AI': 5 analysts discuss SMCI stock after earnings

Published 05/02/2024, 02:48 AM
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SMCI
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Following the release of its earnings report, Super Micro Computer Inc (NASDAQ:SMCI) stock has tumbled, capturing the attention of analysts and investors alike.

As the market digests the financial performance and guidance provided by the company, five analysts have weighed in with their insights and perspectives on SMCI's stock trajectory, evaluating key metrics and providing their insights into the company’s future growth prospects.

Super Micro Computer’s Q1 results breakdown

SMCI reported Q3 earnings of $6.65 per share, $0.85 better than the analyst estimate of $5.80. However, revenue for the quarter came in at $3.85 billion, below the consensus estimate of $3.99 billion.

Looking ahead, the company sees Q4 2024 EPS between $7.62 and $8.42, versus the consensus of $7.14, while revenue for the quarter is seen between $5.1 billion and $5.5 billion, versus the consensus of $4.89 billion.

For the full-year, SMCI expects its EPS to be from $23.29 to $24.09, versus the consensus of $21.99, with revenue between $14.3 billion and $14.7 billion, versus the consensus of $14.6 billion.

SMCI stock outlook as per analysts

Following the report, Barclays analysts noted the strong June quarter guide, upping their price target for SMCI stock to $1,000 from $961 per share. The bank said SMCI delivered a strong June quarter revenue guide, consistent with their checks.

They also stated that the September quarter and December quarter are expected to grow sequentially due to improving supply and AI tailwinds.

“Hopper demand remains much stronger than expected, even considering a product transition is coming,” said Barclays, which maintained an Overweight rating on the stock.

Wells Fargo analysts maintained an Equal Weight rating on SMCI, lowering its price target for the company’s shares to $890 from $960. The bank see the stock sell-off as reflective of increased valuation sensitivity as gross margin scrutiny comes into focus.

Rosenblatt reiterated its Buy rating and $1,300 stock target for SMCI. The firm said: “Supermicro delivered inline sales for the March quarter due to constraints on components largely associated with a faster and bigger liquid cooling rack scale AI transition. Earnings were an upside on better-than-expected GMs in our model at 15.6%.”

Rosenblatt labeled SMCI “the Switzerland of AI,” explaining that its bullish view of SMCI stock is based on the company's AI dynamics that are “a sweet spot for the company’s building block architecture, Green computing, rapid broad platform deployment, and must-have liquid cooling capabilities.“

Analysts at Loop Capital maintained a Buy rating and a $1,500 price target on SMCI. The firm said SMCI’s Jun quarter guidance and subsequent quarter-on-quarter revenue ramp commentary are right in line with their thesis.

“The core of our thesis is both our net-bullish Gen AI server industry posture (L-T) and SMCI as an increasing leader in the need for both complexity and scale (we note SMCI talked about being an ongoing share gainer on the EPS call),” wrote Loop Capital.

KeyBanc Capital reiterated a Sector Weight rating on SMCI stock. “Super Micro intimated possible less seasonality in F1Q provided strong, record backlog, which leads to our increased estimates,” said KeyBanc. “That said, even at new, higher forecasts, we believe SMCI shares provide a balanced risk/reward at current levels.”

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