Super Micro Computer (SMCI) Navigates Growth and Profitability Challenges

Super Micro Computer, Inc. (NASDAQ:SMCI) is one of the best affordable tech stocks to buy right now. On February 4, Goldman Sachs analyst Katherine Murphy maintained a Sell rating on Super Micro Computer, Inc. (NASDAQ:SMCI) and also kept the $27 price target unchanged. Murphy maintained this bearish stance even after Super Micro’s Q2 FY2026 EPS came in at $0.69, well ahead of Goldman Sachs’ expected $0.50 and the broader Wall Street consensus of $0.49.

The analyst expressed caution regarding the stock despite robust demand. And for this, she cited several factors, including uncertainty around the timing of margin improvements and competitive dynamics in the AI server market. Upcoming technology transitions that could disrupt current product lines and ongoing component shortages that complicate production planning are also key factors, noted Murphy.

Murphy also pointed out that Super Micro’s revenue for the quarter reached $12.7 billion. This surpassed the company’s own guidance range of $10 billion to $11 billion. But despite this beat, the 6.4% gross margins undershot the 6.5% anticipated. The analyst attributed the margin compression to a greater mix of large customers wielding significant pricing power, combined with expedited shipping costs.

Meanwhile, on February 4, Needham cut its price target on Super Micro to $40 from $51 and maintained a Buy rating. The firm attributed its decision to lower margin expectations, despite continued strong demand for artificial-intelligence infrastructure. Needham noted that Super Micro’s recent results demonstrated strong revenue performance, but profitability concerns remain a key focus.

Super Micro Computer, Inc. (NASDAQ:SMCI) designs, develops, and manufactures server and storage systems used in cloud computing, artificial intelligence, and enterprise data centers. Its product portfolio includes rackmount servers, GPU-optimized systems, and modular solutions that support AI workloads, 5G/edge computing, and hyperscale deployments.

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Disclosure: None. This article is originally published at Insider Monkey.