Citi Cuts Its Target for Super Micro Computer to $25

1 week ago 5

Joel South

Wed, March 25, 2026 astatine 11:22 AM CDT 4 min read

Super Micro Computer (SMCI) reported Q2 FY2026 gross of $12.68B, a 123.4% year-over-year increase, with $13B successful Blackwell Ultra orders connected its books and full-year FY2026 guidance of astatine slightest $40B, though gross margins compressed to 6.3% from 11.8% year-over-year. Citi chopped its terms people to $25 from $39 with a Neutral rating, citing estimation hazard from export-control allegations against the co-founder and demanding ineligible solution and governance clarity earlier the banal tin recover.
Export-control allegations involving Super Micro’s co-founder and imaginable lawsuit defection are creating a estimation overhang that depresses valuation contempt beardown AI infrastructure request and important bid backlog.
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Super Micro Computer (NASDAQ:SMCI) has had a brutal stretch. Shares person fallen astir 21% implicit the past week, adjacent to 30% implicit the past period and are down astir 42% implicit the past year.

Most analysts support cautious stances, with a Street statement people of $35.73. Now Citi has breached sharply from that pack, slashing its terms people to $25 from $39 portion maintaining a Neutral rating, against the existent terms of $22.23. But tin SMCI realistically scope $25 by the extremity of 2026?

Citi's rationale centers connected estimation risk. The steadfast says export-control allegations against 3 individuals associated with Super Micro, including its co-founder, elevate the company's estimation risk, and that shares warrant a little valuation pending much visibility connected the company's way forward. Co-founder Wally Liaw was accused by prosecutors of violating U.S. export laws, allegedly helping China get Nvidia's apical chips, and the institution placed 2 employees connected permission and fired a contractor successful response. Until absorption demonstrates a credible compliance framework, Citi sees the valuation discount arsenic warranted.

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AI Infrastructure Demand: Super Micro posted Q2 FY2026 gross of $12.68 billion, a 123.4% year-over-year increase, driven by explosive request for AI servers and information halfway solutions. Management has guided for full-year FY2026 gross of astatine slightest $40 billion, a fig that would correspond a structural step-up successful the company's scale.
Blackwell Order Backlog: The institution reported much than $13 cardinal successful Blackwell Ultra orders connected its books arsenic of Q1 FY2026, providing near-term gross visibility that could enactment net betterment and equilibrium expanse improvement.
Margin Recovery Potential: GAAP gross borderline has compressed sharply, falling to 6.3% successful Q2 FY2026 from 11.8% a twelvemonth earlier. Any normalization toward humanities levels would meaningfully grow net power, making the existent guardant P/E of astir 8x look charismatic if execution improves.