New York, Jan 13, 2026, 14:44 EST
- SMCI dropped roughly 6% following Goldman Sachs initiating coverage with a Sell rating and setting a $26 target
- Goldman highlighted limited clarity on profit outlook, despite robust demand for AI servers
- The stock has dropped steeply in the last three months, intensifying negative sentiment
Shares of Super Micro Computer (SMCI) dropped 6.3% to $28.22 Tuesday afternoon following Goldman Sachs analyst Katherine Murphy’s initiation of coverage with a Sell rating. She set a $26 price target, pointing to “limited visibility into improving profitability.” (Benzinga)
The warning comes as investors, once eager for artificial intelligence (AI) hardware, start focusing more on profit margins than just top-line growth. Super Micro’s shares have plunged almost 45% in the last three months, according to a Yahoo Finance report. (Yahoo Finance)
Goldman isn’t challenging Super Micro’s role in AI servers. Barron’s noted the bank called it a key supplier to fast-growing “neoclouds”—new cloud providers building AI data centers—like IREN and CoreWeave. Still, Goldman expects profits to take a hit, slashing its price target from $34 to $26. Margins are forecast to drop to about 7.5% in 2026, down from over 15% in 2022, Barron’s reported. (Barron’s)
Murphy also cautioned that large contracts can lift revenue but squeeze margins — bringing in more sales yet shrinking the portion of revenue that ends up as profit. She highlighted increased competition from both original equipment manufacturers (OEMs), who sell branded systems, and original design manufacturers (ODMs), who produce hardware for other companies.
The stakes are high since Super Micro builds servers and full racks by combining costly parts like GPUs, memory, and networking gear. Dell Technologies and Hewlett Packard Enterprise are also vying for AI data center dollars, even as chip makers maintain a firm hold on the bill of materials.
On Jan. 10, Lucas Ma of Envision Research wrote on Seeking Alpha that the market is shifting toward a more commodity-like state. He noted Super Micro is ramping up its liquid-cooled AI rack production, aiming for 5,000 racks monthly by fiscal 2026. Ma also warned that increasing DRAM and NAND prices might squeeze margins once more. (Seeking Alpha)
Super Micro is pushing the narrative past just big data centers. On Jan. 11, CEO Charles Liang highlighted AI’s impact on shopping in a press release tied to the NRF retail event in New York. The company is promoting edge systems designed for in-store analytics and theft prevention. (Super Micro Computer)
The stock has swung sharply since last year, as investors balanced rapid AI-driven growth with concerns over operational hiccups and reporting risks. In November, Super Micro revealed that last-minute configuration changes demanded by a key customer held up shipments, shifting roughly $1.5 billion in revenue from the September quarter to the December quarter. (Reuters)
SMCI’s shares fluctuated from $27.80 to $30.14 on Tuesday. By mid-afternoon, roughly 41 million shares had exchanged hands.
The coming quarters might still sting: if component prices rise further and customers demand steeper discounts, Super Micro’s gross margin — the portion of revenue left after hardware expenses — might struggle to recover. Any hiccup with major AI clients would quickly hit the earnings reports.
