What Happened?
Shares of server solutions provider Super Micro (NASDAQ: SMCI) fell 5.5% in the afternoon session after Goldman Sachs initiated coverage of the stock with a "Sell" rating and a $26 price target.
The analyst cited ongoing pressure on the company's profit margins and limited clarity on its future profitability, despite strong growth in its AI-server business. The bank noted that margins had been cut in half over the previous three years to 9.5%. Goldman Sachs also believed Super Micro's position between powerful suppliers and a few large customers left it unable to set its own prices. The firm's earnings per share forecasts for Super Micro were 10% below the general expectation from other analysts.
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What Is The Market Telling Us
Super Micro’s shares are extremely volatile and have had 65 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 11 days ago when the stock gained 5.7% on the news that the company unveiled a new high-density server designed for demanding AI and high-performance computing workloads.
The new 6U SuperBlade platform featured both direct liquid and standard air cooling and utilized dual Intel Xeon 6900 Series processors. Supermicro stated this design packed more computing power into less space, allowing for up to 25,600 cores per rack, which was important as modern data centers faced power and cooling limits. The company highlighted that the system could reduce cabling by up to 93% and decrease space requirements by approximately 50% compared to traditional servers. This product launch addressed the growing need for advanced cooling solutions driven by increasingly powerful AI chips.
Super Micro is down 8.3% since the beginning of the year, and at $28.39 per share, it is trading 53.2% below its 52-week high of $60.71 from July 2025. Investors who bought $1,000 worth of Super Micro’s shares 5 years ago would now be looking at an investment worth $8,723.
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