Shares of Super Micro Computer Inc. (SMCI) took a significant dive on Friday after JP Morgan analyst Samik Chatterjee downgraded the company’s rating from Overweight to Neutral and slashed its price target from $950 to $500. This move stemmed from concerns surrounding the company’s delayed 10-K filing and the lack of clarity regarding its path back to compliance with regulatory requirements.
Chatterjee acknowledged that Super Micro is actively working to address these compliance issues and that business operations are continuing as usual. However, he expressed difficulty in obtaining a clear picture of the company’s future prospects due to the ongoing uncertainty surrounding the timing of its return to compliance.
The analyst pointed to the Hindenburg report and the delayed 10-K filing as separate but significant events that have cast a shadow on the company’s near-term outlook. He anticipates that this lack of visibility will create challenges for investor sentiment, particularly in comparison to the 2017-2020 period when Super Micro was operating in full compliance.
Chatterjee also highlighted the potential for Super Micro to employ more aggressive pricing strategies in order to maintain its demand pipeline. He added that investors should closely monitor the company’s progress toward restoring its margins to their long-term levels over the next few quarters.
The reduced price target reflects a lower earnings multiple, aligning it with traditional IT hardware companies that exhibit significantly lower growth trajectories. This adjustment accounts for the uncertainty surrounding Super Micro’s current situation. Chatterjee’s updated 2026 EPS estimate, based on a target P/E multiple of 10x (down from 19x previously), also reflects the balancing act between potential gains from strong AI-driven compute demand and the ongoing challenges related to internal controls and regulatory filings.
Despite these concerns, Chatterjee recognized Super Micro’s strong product portfolio, which includes full rack-scale solutions and liquid-cooled systems, as well as its unique building block approach to product development. These factors position the company favorably to capitalize on the robust demand for computing power fueled by artificial intelligence.
The analyst projected fiscal first-quarter 2025 revenue of $6.54 billion and EPS of $7.48. As of Friday’s close, SMCI stock was down 7.11% at $384.58.
