TLDR
- Northland Securities analyst Nehal Chokshi raised Super Micro Computer’s (SMCI) price target to $70 from $57, maintaining a Buy rating
- The new price target implies an 88.9% upside potential from current levels
- Chokshi believes SMCI can potentially achieve its FY2026 sales target of $40 billion despite short-term headwinds
- SMCI stock has mixed signals from AI earnings, with Broadcom providing reassuring signals while HPE gave a weak forecast
- SMCI stock has lost 68% in the past year, with analysts giving it a Hold consensus rating
Super Micro Computer (SMCI) received a notable price target boost from Northland Securities while facing mixed signals from the artificial intelligence sector. Northland analyst Nehal Chokshi raised SMCI’s price target to $70 from $57, maintaining a Buy rating on the stock.
The revised price target now matches the Street High and suggests an 88.9% upside potential from current levels. This comes as SMCI stock has fallen nearly 68% over the past year.
Chokshi, a five-star analyst ranked 57th out of 9,414 analysts on TipRanks, has a strong track record with SMCI. His previous recommendation on the stock between January 2023 and January 2024 earned an impressive 497.4% return.
The analyst believes Super Micro’s market share was impacted by temporary headwinds. These include challenges in becoming current with SEC filings and fears of delisting from Nasdaq.
Despite these obstacles, Chokshi remains optimistic about SMCI’s future. He considers the company’s fiscal 2026 sales target of $40 billion “reasonable,” though his own projection is more conservative at $30.9 billion.
SMCI provides liquid cooling technology for data centers running AI models. The company’s sales projections for the March quarter are heavily influenced by GPU as a Service customers.
These customers are positioned in the queue for Nvidia’s advanced Blackwell GPUs. This makes SMCI’s sales dependent on Nvidia’s timely supply of these components.
Chokshi noted that SMCI’s projections align with competitor Dell’s forecasts. Dell has projected similar figures for its servers and networking revenues for the April quarter.
This consistency between the two companies’ projections aligns with supplier Nvidia’s Blackwell shipments. During the January quarter, most Blackwell GPUs were shipped to cloud service providers that were customers of neither SMCI nor Dell.
SMCI stock edged lower in recent trading, dropping 0.2% to $36.96 in premarket trading on Friday. This followed a 4.8% decline in the previous session.
The stock has dropped sharply from the highs
The stock has dropped sharply from highs of around $60 reached last month. That peak came when the company avoided delisting by meeting its compliance deadline for submitting financial filings.
Mixed signals are emerging from other companies in the AI sector. Chip maker Broadcom provided a reassuring signal with stronger-than-expected revenue and guidance in its recent earnings report.
However, AI server maker Hewlett Packard Enterprise gave a weak forecast. HPE cited inventory issues related to the transition to Nvidia’s Blackwell GPUs and adjustments for recent tariffs on goods from China, Canada, and Mexico.
Despite accounting uncertainties, SMCI has become popular among retail investors. This includes those using leveraged single-stock funds, contributing to the stock’s notable volatility.
Analysts remain cautious on SMCI
Currently, analysts maintain a cautious stance on SMCI stock. On TipRanks, the stock has a Hold consensus rating based on three Buys, four Holds, and two Sell ratings.
The average price target for Super Micro Computer stands at $49.14, implying a 32.6% upside potential from current levels. This is considerably lower than Chokshi’s optimistic $70 target.
Super Micro’s future performance may depend on its ability to overcome short-term challenges and capitalize on the growing demand for AI infrastructure. The company’s specialized liquid cooling technology for data centers running AI models could position it well in this expanding market.
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