Super Micro Computer (NASDAQ:SMCI) stock has had anything but a smooth stretch lately. Earlier this month, the maker of AI servers and solutions posted a painful revenue miss when it reported its Q1 Fiscal Year 2026 numbers, a disappointment that has sent shares tumbling 23% since the print.
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Sales came in at $5 billion, marking a double-digit decline both year-over-year and sequentially, and falling short of the company’s prior $6 to $7 billion outlook. Yet, SMCI still reaffirmed, and slightly raised, its full-year revenue guidance to a range of $33 billion to $36 billion, attributing the quarterly miss to design upgrades that pushed some sales into the current period.
The market has been burned by SMCI before, and it has now been well over a year since the company met its revenue targets. As a result, investors appear far less willing to extend the benefit of the doubt.
And if you’re wondering whether this latest pullback represents a buying opportunity, top investor Geoffrey Seiler has a word for you.
“For a stock that should be a big AI infrastructure build-out winner that just materially raised its revenue guidance, this would seem like a no-brainer—but it’s not,” says Seiler, who ranks among the top 2% of stock pros tracked by TipRanks.
Its not just the revenue disappointment that’s giving Seiler pause, but a falling gross margin that has been dropping for multiple quarters. Concerning for the investor, this isn’t expected to jump back up anytime soon, noting that the company has cautioned that spending on large-scale projects and strategic investments will continue to pressure profits.
Although SMCI’s forward P/E of 13.5x FY26 estimates appears “cheap on the surface,” Seiler still isn’t persuaded. Beyond his fears over low margins, the investor points out that SMCI hasn’t always been able to keep up with the latest technology innovations.
“The company has had difficulty navigating GPU product transition cycles in the past, which could become an ongoing issue now that Nvidia is looking to introduce new GPU architectures each year,” sums up Seiler. “Given its history, I prefer to stay on the sidelines.” (To watch Geoffrey Seiler’s track record, click here)
Wall Street isn’t too eager, either. With 5 Buy recommendations, 5 Holds, and 2 Sells, SMCI carries a consensus Hold (i.e. Neutral) rating. However, its 12-month average price target of $47.18 implies an upside of ~30% for the next 12 months. (See SMCI stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.