Super Micro Computer stock initiated at Sector Weight by KeyBanc
Investing.com
Published Jun 25, 2025 06:25PM ET
Investing.com - KeyBanc initiated coverage on Super Micro Computer (NASDAQ:SMCI), a $27.75 billion market cap technology hardware company, with a Sector Weight rating on Wednesday.
The firm cited concerns about the competitive nature of the server market, describing it as "one of the most competitive businesses in the IT Hardware space." KeyBanc expects these competitive and structural factors will likely pressure gross margins, which currently stand at 11.27%, and drive Super Micro's profitability profile lower.
KeyBanc noted that Super Micro's growth is expected to decelerate to approximately 12% exiting F4Q from its current impressive 82.49% revenue growth rate, while margins have fallen from a peak of about 19% to the 10-11% range. The firm also pointed out that despite growth, Super Micro "has not consistently produced FCF," which KeyBanc considers "the ultimate sign of value creation for shareholders." According to InvestingPro , there are 13 additional key insights available about SMCI's financial health and growth prospects.
The analyst report mentioned recent accounting and execution missteps at Super Micro, suggesting the company will need to meet expectations to justify a rerating. KeyBanc believes these expectations "were set too high."
The stock's valuation is currently trading at approximately 17.2x KeyBanc's 2026 adjusted EBITDA estimate, which the firm considers "above pre-AI" levels, leading to its conclusion that Super Micro "appears expensive."
In other recent news, Super Micro Computer, Inc. announced the pricing of $2 billion in convertible senior notes due 2030. The company plans to use approximately $1.96 billion in net proceeds from this offering for various purposes, including $158.4 million for capped call transactions and around $200 million to repurchase about 4.9 million shares of its common stock. Supermicro also revealed its new AI solutions featuring AMD (NASDAQ:AMD) Instinct MI350 GPUs, which are designed for AI workloads and offer significant improvements in memory capacity and performance. Additionally, the company has expanded its NVIDIA (NASDAQ:NVDA) Blackwell Architecture solutions to the European market, introducing over 30 new systems aimed at enterprise AI deployments. The expanded lineup includes systems for NVIDIA HGX B200 and RTX PRO 6000 Blackwell Server Edition, among others. Supermicro's collaboration with NVIDIA aims to enhance AI infrastructure deployment efficiency and reduce implementation timelines. These developments highlight Supermicro's ongoing efforts to strengthen its product offerings and expand its market reach.
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