Super Micro Computer (NASDAQ: SMCI) shares surged on Friday, leading gains on the S&P 500 after JPMorgan upgraded its rating and price target for the server maker’s stock.
The firm raised its rating to “neutral” from “underweight” and increased the price target to $45 from $35, noting that the company is “cycling past filing challenges” after meeting a key deadline to stay listed. Analysts also pointed to potential growth driven by strong demand for its servers based on Nvidia’s (NASDAQ: NVDA) Blackwell chips.
In a note on Friday, the analysts wrote,
“Supermicro is on the cusp of benefitting from the ramp in Blackwell-based server shipments, which are experiencing significantly higher demand than previous generations.”
Shares closed the day up nearly 8%, trading above $42. This brings year-to-date gains to about 40%, though the stock has still lost more than half its value over the past 12 months.
Super Micro Computer (NASDAQ: SMCI) has been volatile over the past year, particularly after accusations of accounting manipulation surfaced last August, leading to the resignation of its auditor. Last month, the company narrowly avoided potential delisting after submitting delayed financial disclosures to the Securities and Exchange Commission.
However, JPMorgan analysts cautioned that the server maker could still face some headwinds, including an “increasingly competitive AI Servers landscape,” which could lead to “aggressive pricing” and pressure its gross margins. Elevated costs and the potential for higher interest expenses when the company raises more capital could also present challenges.
