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Friday's Featured News 2 Analysts Sour On Super Micro: Can SMCI Recover Amid +40% Fall?By Leo Miller. Publication Date: 1/20/2026. 
Key Points - After seeing its share price nearly double during the year, Super Micro Computer closed 2025 in the red.
- While the firm sees massive growth ahead in 2026, profitability concerns are weighing on recent Wall Street targets.
- Super Micro's new DCBBS business line could provide a much-needed avenue for profitable growth in the future.
Shares of artificial intelligence (AI) server maker Super Micro Computer (NASDAQ: SMCI) experienced a volatile 2025. The stock rallied as much as 99% through late July but ultimately finished the year about 4% lower. Now, in 2026, two Wall Street analysts have added fuel to the fire by issuing pessimistic price targets on Super Micro. Trading near $33 per share at the Jan. 16 close, SMCI is down about 46% from its 52-week high. After such a sharp decline, can SMCI shares stage a meaningful recovery, or should investors heed these recent analyst warnings? SMCI’s Tug-of-War: Explosive Growth vs. Weakening Profitability Imagine a bull market so powerful, every single investor became a millionaire. Not by finding the next NVIDIA or Bitcoin, but by owning a simple index fund.
It sounds impossible. Yet it happened – just a short time ago. Now a legendary figure says: "Brace yourselves. It's about to happen here, in America. But fair warning – it could be the worst thing that ever happens to you."
This story has received little coverage in the press. But if history repeats, it could bump tens of millions of Americans into a 7-figure net worth practically overnight. Click here for the full story. Super Micro shares moved sharply lower after the company reported its Q1 results for fiscal 2026 on Nov. 4, 2025. (SMCI’s fiscal year is offset from the calendar year by roughly six months.) The quarter highlighted a clear trade-off between two key metrics: rapid growth and weakening profitability. The market reacted quickly, knocking SMCI down about 6% in regular trading and roughly another 4% in after-hours trading around the release. Despite being down more than 40% from its February highs, Super Micro still has some potentially positive catalysts. The company expects at least $36 billion in sales for FY2026, which would represent growth of at least 64%—a meaningful acceleration from FY2025’s 47% growth. Super Micro said it has over $13 billion in back orders tied to NVIDIA’s (NASDAQ: NVDA) Blackwell servers and recently signed the largest deal in its history. But to capture that revenue, the company anticipates making significant concessions: its new Blackwell-optimized platform will carry higher costs and lower margins. Notably, management expects gross margin to fall 300 basis points from Q1 FY2026 to Q2 FY2026, which would push an already low gross margin down to roughly 6.5%. While the company expects margins to recover over time, such a low level leaves little room to convert massive sales into meaningful profits. Goldman and Mizuho Eye Downside Ahead for SMCI Analysts have flagged profitability as a major concern. Goldman Sachs and Mizuho recently set $26 and $31 price targets on SMCI, respectively—implying potential declines of roughly 20% and 5% from current levels. Goldman says that while it expects Super Micro to remain a medium-term leader in AI servers, it has limited visibility into improvements in profitability. That concern is understandable: margins have trended lower since peaking in late 2022, which could signal a weakening competitive advantage. Even with the prospect of very large top-line growth, consensus forecasts show operating income rising only about 8% in FY2026, with adjusted earnings per share essentially flat. Because Super Micro purchases chips from NVIDIA and integrates them into servers, it faces limited leverage over component pricing—NVIDIA’s strong pricing power can squeeze SMCI’s margins even as revenue expands. Super Micro is pursuing higher-margin opportunities to offset that pressure. One example is its data center building block solutions (DCBBS). Rather than selling only server racks, DCBBS aims to deliver larger pre-built systems and more comprehensive deployments. The company believes the added complexity and faster deployment will support higher margins; early DCBBS sales reportedly show gross margins above 20%. Average Targets See Big Upside, DCBBS Is Key to Shifting Outlook Despite the bearish calls from Goldman and Mizuho, many analysts remain constructive on Super Micro. The consensus target of $47 implies roughly 44% upside. The average of analyst targets that were updated after the company’s most recent earnings release is largely unchanged. That consensus leaves open the possibility of a significant near-term rebound, but the longer-term outlook is still uncertain. Super Micro has struggled to convert revenue growth into free cash flow, the clearest measure of value creation. That would need to change for confidence in the stock to improve materially. Watch DCBBS closely. If it scales into a meaningful business line and sustains solid margins, it could provide the higher-margin revenue Super Micro needs to shift the company’s outlook.
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