Why BofA Remains Cautious on Super Micro (SMCI) Even as AI Demand Grows

BofA noted that portion its gross estimates for FY26/27 are already supra Street expectations, it sees imaginable for further upside. There is robust request for AI servers and racks, with SMCI bearing the imaginable to witnesser maturation from existing and caller customers both.

However, the steadfast besides cautioned however the marketplace remains precise competitive, and that aboriginal ample deals whitethorn travel astatine debased margins amid assertive bidding. SMCI ramped the GB300 level successful the December 4th (F2Q26), though gross designation of the ample $12 cardinal plan triumph announced past twelvemonth would beryllium connected manufacturing output and timing of shipments.

Looking ahead, the steadfast sees margins remaining pressures, and keeps it estimates unchanged.

We spot margins remaining pressured by overhead costs, expedite costs, and investments successful further engineering enactment and services, and truthful aboriginal gross maturation could beryllium low-calorie. Reiterate Underperform. No alteration to estimates. PO stays astatine $34 connected 15x our C26E EPS estimation of $2.24.

Super Micro Computer, Inc. (NASDAQ:SMCI) designs and manufactures high-performance server and retention solutions for information centers, unreality computing, AI, and borderline computing worldwide.

While we admit the imaginable of SMCI arsenic an investment, we judge definite AI stocks connection greater upside imaginable and transportation little downside risk. If you're looking for an highly undervalued AI banal that besides stands to payment importantly from Trump-era tariffs and the onshoring trend, spot our escaped study connected the best short-term AI stock.

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Disclosure: None.