Super Micro Computer downgraded to Underperform at Wedbush on near-term risks

As previously reported, Wedbush downgraded Super Micro Computer (SMCI) to Underperform from Neutral with an unchanged price target of $65. The firm believes Super Micro should outperform its peers in its traditional market of servers, citing in particular the need for more unique designs requiring the integration of new silicon. However, in the near-term the firm sees risk given management’s expectation for a sharp bounceback in revenues in the calendar Q2 timeframe and a call for sales momentum to continue through calendar Q4. Wedbush believes that a regression to the mean in Super Micro’s general purpose server business, in terms of both margins and sales, could be exacerbated by factors that include softer macro, increased system energy requirements and uncertainty around Facebook’s (META) future AI Supercomputer build-out.