Super Micro Computer Inc. (SMCI, Financials) shares extended losses this week after Goldman Sachs began coverage with a Sell rating and a Street low price target of $26, warning that profitability remains under pressure despite strong demand for AI server systems.
Analyst Katherine Murphy said Super Micro continues to win large orders from tier-2 and neocloud customers but noted that those contracts are increasingly margin dilutive. While the company remains a key supplier in the AI infrastructure market, Murphy said “strong demand alone may not be enough to sustain earnings growth.”
Goldman expects rising competition and higher investment costs to weigh on future profitability, even as revenue continues to grow.
Murphy's earnings estimates sit roughly 10% below Wall Street consensus, citing “limited visibility” into when margins might recover.
