TLDR
- Super Micro Computer (SMCI) stock surged 11% to $40.84 on Tuesday while broader tech stocks fluctuated
- Rosenblatt Securities analyst Kevin Cassidy reinitiated coverage with a Buy rating and $60 price target
- CEO Charles Liang emphasized that accounting issues were “behind them” in his first interview since auditor Ernst & Young resigned
- The company recently filed delayed financial reports, avoiding delisting from Nasdaq
- Supermicro unveiled new edge AI servers featuring Intel Xeon 6 processors, targeting edge computing and embedded workloads
Super Micro Computer shares climbed sharply on Tuesday, rising 11% to $40.84 while most tech stocks struggled to find direction after Monday’s selloff.
The server maker stood out as the top performer in the S&P 500 for the day. This comes as other tech giants like IBM and Intel, both Super Micro clients, closed down 3.1% and 0.8% respectively.
The broader tech market showed mixed results. The tech-heavy Nasdaq Composite fell 0.2% after dropping 4% on Monday.
Specialized tech ETFs also declined slightly. The iShares U.S. Technology exchange-traded fund dipped 0.2% while the Technology Select Sector SPDR ETF fell 0.4%.
Market volatility was evident across all indexes. The S&P 500 decreased 0.8% and the Dow Jones Industrial Average lost 478 points or 1.2%.
Top analyst gives stock a Buy rating
Several factors contributed to Super Micro’s impressive performance. Rosenblatt Securities analyst Kevin Cassidy gave the stock a boost by reinitiated coverage with a Buy rating.
Cassidy set a $60 price target, suggesting potential upside of 56% from current levels. He highlighted that artificial intelligence revenue now makes up nearly 70% of the company’s total sales.
The analyst was particularly impressed with Super Micro’s ability to deliver liquid cooling solutions at scale. This capability addresses industry concerns about expenses and reliability in cooling systems.
CEO Charles Liang may have further bolstered investor confidence during his Fox Business appearance on Monday. Speaking from Las Vegas, Liang gave his first interview since Ernst & Young resigned as the company’s auditor in October 2024.
Liang reassured investors that the company’s new auditor, BDO USA, simply “needed time” to complete reviews of delayed financial reports. He emphasized that any accounting issues were firmly in the past.
The company recently avoided a potential delisting from Nasdaq. Super Micro met the February 25 deadline to submit its audited annual report for the fiscal year ending June 30, along with two delayed quarterly reports.
In product news, Super Micro announced a new range of edge computing systems. These new servers are optimized for embedded workloads and feature the latest Intel Xeon 6 processors.
New products will enhance AI capabilities
The new products aim to enhance AI capabilities at the edge by enabling real-time data processing. They offer increased core counts, improved performance per watt, and enhanced memory bandwidth.
The SYS-112D series includes Intel Xeon 6 SoC with up to 512GB of DDR5 memory and dual 100 GbE QSFP28 ports. These features make it suitable for Edge AI applications in space-constrained environments.
For IoT and AI inferencing, Supermicro’s SYS-E201-14AR and SYS-E300-14AR systems come equipped with 15th Gen Intel Core Ultra processors. These include up to 24 cores and an onboard AI accelerator.
The company is also targeting edge data centers with its 2U Edge AI product family. These systems integrate Intel’s Xeon 6700/6500 series processor with up to 6 single-width GPU accelerators.
Super Micro designs and manufactures these products in-house. The company aims to improve total cost of ownership and reduce environmental impact through its designs.
Super Micro Computer has made notable financial progress in recent months. The company has regained compliance with NASDAQ listing requirements after filing delayed reports.
NASDAQ compliance has led to renewed confidence
This compliance restoration has led to renewed analyst confidence. Goldman Sachs raised its price target for Super Micro to $40, while Barclays adjusted its rating to Equalweight with a $59 target.
The company is expanding its physical footprint as well. Super Micro recently announced a third campus in Silicon Valley to enhance production of advanced data center solutions.
Despite these positive developments, analysts note some ongoing challenges. Mizuho and Barclays have highlighted internal control issues and competitive pressures from industry peers like Dell Technologies.
A key development in Super Micro’s customer base is the addition of a new major client. This customer reportedly accounted for 31% of revenue in the second quarter of Fiscal Year 2025.
February was a strong month for the company’s stock performance. Super Micro ended February as the top performer in the S&P 500 index.
The stock rallied earlier in February following an encouraging fiscal second-quarter business update. The company’s longer-term sales guidance significantly exceeded analysts’ forecasts.
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