Super Micro Computer (SMCI) stock plunged 11.5% on Wednesday, as the AI (artificial intelligence) server maker dampened investor sentiment ahead of its Q3 FY25 earnings scheduled on May 6 by announcing a disappointing business update and preliminary results. The company lowered its Q3 revenue and profit estimates, saying that some delayed customer platform decisions had shifted sales into the fourth quarter.
Following yesterday’s decline, SMCI stock is up 4.5% so far in 2025 but is down about 63% over the past year. Super Micro, which was once considered one of the key winners of the generative AI wave, saw its stock plunge last year due to short seller Hindenburg Research’s accusations of accounting irregularities, delays in filing financial reports, and the exit of its auditor.
When SMCI became current with its filings, analysts expected the company to gradually regain investor confidence. But the latest update has again adversely impacted investors’ faith in the company’s execution.
Analysts’ Reactions to SMCI’s Dismal Update
SMCI’s preliminary Q3 numbers raised concerns about the momentum in its business and demand for its offerings amid a weakening macro backdrop. It also raises questions about the credibility of the company’s guidance. Notably, in February, SMCI stated that it expects its top line to come in at $40 billion in the fiscal year ending in June 2026, a target that currently looks very ambitious.
Following the update, Barclays analyst George Wang slashed the price target for Super Micro Computer stock to $34 from $59 and reiterating a Hold rating. The analyst thinks that SMCI’s previous outlook was too optimistic. Plus, he contends that there is substantial uncertainty around AI server builds, with a lack of visibility into calendar year 2025 as customers undergo product transitions. Wang added that SMCI’s high dependence on xAI and Coreweave (CRWV) as customers also makes it vulnerable to quarter-to-quarter “lumpiness and volatility with potential share loss to Asian ODMs [original design manufacturers].”
Meanwhile, Northland Securities analyst Nehal Chokshi thinks that the guidance miss was perhaps driven by some customers opting to shift from Nvidia’s (NVDA) Hopper to Blackwell during the March-end quarter. That said, he believes that SMCI’s statement that “new generation product design wins are robust” is an indication that the company’s Q4 FY25 and FY26 estimates are “correctly calibrated.” The 5-star analyst reiterated a Buy rating on SMCI stock with a price target of $70.
Is SMCI Stock a Good Buy?
Investors and analysts will pay attention to management’s commentary on May 6 to get more clarity on the company’s Q3 FY25 performance and demand backdrop. Analysts now expect SMCI to report Q3 FY25 EPS of $0.43, reflecting a significant decline from $0.67 in the prior-year quarter.
Given the ongoing pressures, Wall Street is sidelined on SMCI stock, with a Hold consensus rating based on four Buys, five Holds, and two Sell recommendations. The average SMCI stock price target of $43 implies 35% upside potential.
