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Additional Reading from MarketBeat Media 2 Analysts Sour On Super Micro: Can SMCI Recover Amid +40% Fall?Reported by Leo Miller. Posted: 1/20/2026. 
Quick Look - 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) had a volatile 2025. The stock rallied as much as 99% through late July but finished the year down about 4%. Now, in 2026, two Wall Street firms have taken a more cautious stance, issuing pessimistic price targets for Super Micro. As of the Jan. 16 close, SMCI traded near $33 per share, roughly 46% below its 52-week high. After that large pullback, can SMCI mount a meaningful recovery, or do the new price targets signal deeper trouble? 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 began to slide after the company reported Q1 results for fiscal 2026 on Nov. 4, 2025. (SMCI's fiscal year is offset from the calendar year by about six months.) The report highlighted a clear trade-off between two key metrics: rapid revenue growth and deteriorating margins. The market reacted negatively, pushing the stock down about 6% in regular trading and another roughly 4% in after-hours trading around the release. Despite the pullback from February highs, Super Micro's revenue outlook is notably strong. The company expects at least $36 billion in sales for FY2026, implying growth of at least 64% versus FY2025's 47% gain. Management says it has more than $13 billion in back orders tied to NVIDIA's (NASDAQ: NVDA) Blackwell servers and recently closed the largest deal in company history. However, supporting that revenue surge appears to come at the cost of margins. Management warned that the new Blackwell-optimized platform will carry higher costs and lower margins. The company expects gross margin to decline about 300 basis points from Q1 to Q2 FY2026, bringing that metric down to roughly 6.5%. While management expects margins to recover over time, such a low near-term margin leaves limited room to convert strong sales into meaningful profits. Goldman and Mizuho See Downside for SMCI Profitability concerns underpin the recent analyst moves. Goldman Sachs and Mizuho set $26 and $31 price targets on SMCI, respectively, implying downside of roughly 20% to 5% from current levels. Goldman acknowledges Super Micro's position as an AI server competitor but says it has limited visibility on margin improvement. That view is supported by a trend of falling margins since their peak in late 2022, which may signal a weakening competitive edge. Even with expectations for sizable topline growth, consensus forecasts project operating income to rise only about 8% in FY2026, while adjusted earnings per share (EPS) are essentially flat. Because Super Micro integrates NVIDIA chips into its servers, it faces pricing pressure from NVIDIA's strong market position—making revenue growth easier than margin expansion. Super Micro is pursuing higher-margin initiatives, however. Its data center building block solutions (DCBBS) aim to move the company beyond component-level sales to offer larger pre-built systems and services. Management says DCBBS currently delivers gross margins north of 20%, and the company expects increased complexity and faster deployment to support higher margins as the business scales. Consensus Sees Upside, but Execution Will Matter Although Goldman and Mizuho are bearish, many analysts remain constructive. The consensus target of $47 implies roughly 44% upside, and the average target following the company's latest earnings report changed little. That consensus suggests the possibility of a significant near-term rebound. Still, Super Micro's longer-term outlook hinges on its ability to convert revenue into free cash flow—a key measure of value creation it has yet to demonstrate consistently. Investors should watch DCBBS closely: if it becomes a meaningful, high-margin revenue stream, it could materially improve the company's profitability profile and justify a more bullish valuation.
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