Mizuho cuts Super Micro Computer stock price target on competition

Mizuho Securities reduced its price target on Super Micro Computer (SMCI) shares from $43 to $36 while keeping a neutral rating. The stock, currently trading at $31.39, is deemed undervalued according to InvestingPro's fair value analysis, which suggests substantial upside potential. Super Micro Computer reported impressive September quarter revenue of $19.9 billion, exceeding estimates of $15.0 billion.

The company also increased its December quarter revenue guidance to $20.5 billion, surpassing the consensus estimate of $16.5 billion. Gross margins showed a decline, with Q3 gross margin at 12.8%, down 480 basis points from the previous quarter, and expected to be around 12.3% in Q4, a drop of roughly 55 basis points. The AI mix grew to 71% in Q3, with expectations to reach 75% in fiscal 2027.

Despite strong revenue growth of 78%, the company faces profitability challenges with a gross profit margin of just 10.82% over the last twelve months. Super Micro Computer has raised its fiscal 2027 revenue guidance to $77 billion, up from the prior estimate of $68.5 billion. The firm attributes this growth to record backlogs and supply constraints.

The company cited competition and supply challenges, which could have a positive impact on Dell Technologies, which Mizuho rates as an Outperform with a $650 price target, ahead of Dell's November 24 earnings.