Will Super Micro Computer Stock Surge After Feb. 25?

As Super Micro Computer (SMCI) approaches the crucial date of Feb. 25, investors are eagerly awaiting the resolution of the company's delayed financial filings. The tech giant has been working diligently to address these issues and maintain its listing on the Nasdaq. With the potential for a significant stock surge on the horizon, let's delve into the factors that could drive Super Micro Computer's stock performance following this make-or-break moment.

Super Micro Computer's stock has experienced a rollercoaster ride in recent months, with shares plummeting more than 65% from September through mid-November 2024. This decline was primarily driven by concerns raised by a short report from Hindenburg Research and the subsequent postponement of filing its audited annual and quarterly reports. However, the company has taken steps to address these issues, such as hiring a new auditor and working with the Nasdaq to establish a new filing date for the earnings reports.

If Supermicro successfully files its reports on time and maintains its listing on the Nasdaq, investors may react positively to the resolution of these issues. The stock could potentially surge following this major sign of progress, as Supermicro has been known to react strongly to both positive and negative news. However, any disappointment or further delays in the filing process could continue to weigh on the stock's performance.



Super Micro Computer's revenue growth has been driven by several key factors, including the artificial intelligence (AI) boom, customization, and innovation. However, the company's gross margin trend has had a significant impact on its profitability. In the second quarter of fiscal year 2025, the company's gross margin was expected to be around 11.8% to 11.9%, which was lower than the expected 13.6% due to unfavorable pricing, delayed shipments, and component procurement challenges. This decline in gross margin negatively impacted the company's profitability, as seen in the Q4 2024 earnings report where the gross margin was 11.3%, significantly below the expected 13.6%.

Analysts have expressed concerns about the declining gross margin, with Bank of America's Ruplu Bhattacharya downgrading SMCI stock to Hold from Buy, citing margin concerns. He expects SMCI's margins to return to the normal range of 14% to 17% by the end of 2025, aided by improved customer mix, new platform launches, and overall manufacturing efficiencies.

Barclays' George Wang also kept the Buy rating on SMCI but cut the price target, noting that despite growing revenues and solid guidance, the margin headwinds remain a cause of concern. Wang thinks that higher manufacturing costs for DLC (direct liquid cooling) racks and an unfavorable customer mix weighed on Q4 gross margin.

Goldman Sachs' Michael Ng maintained a Hold rating but cut the price target on SMCI stock, reflecting a 15x near-term EPS multiple, down from 21x guided earlier. The analyst lifted the FY25 and FY26 EPS estimates to reflect the potential for higher revenue growth.

In conclusion, Super Micro Computer's stock performance following Feb. 25 will be closely watched by investors. If the company successfully files its reports on time and maintains its listing on the Nasdaq, the stock could potentially surge, driven by the resolution of these issues and the company's strong revenue growth prospects. However, investors should closely monitor the company's margin trends in the coming quarters, as analysts expect margin expansion driven by improved customer mix, new platform launches, and manufacturing efficiencies.