Barclays Trims Super Micro (SMCI) Target Despite Strong AI Server Demand

Super Micro Computer, Inc. (NASDAQ:SMCI) is one of the 10 AI Stocks to Keep on Your RadarOn February 4, Barclays analyst Tim Long lowered the price target on Super Micro Computer (NASDAQ: SMCI) to $38.00 (from $43.00) while maintaining an “Equal Weight” rating.

Discussing SMCI’s earnings report, Barclays noted how December quarter results exceeded expectations on both revenue and earnings. SMCI posted revenue of $12.7 billion, which represents a 153% quarter-over-quarter increase and also exceeds Barclays’ estimate by more than $2 billion.

However, gross margin came in at 6.4%, which is slightly below the analyst firm’s 6.5% estimate. The management forecast’ fiscal third-quarter revenue to be at least $12.3 billion and lifted its full-year 2026 revenue guidance to at least $40 billion, in line with analysts’ expectations of 66% revenue growth this fiscal year.

Gross margin is anticipated to improve by 30 basis points quarter-over-quarter in the next quarter, albeit still remaining below 7%. The firm added that Data Center Building Block Solutions (DCBBS) is likely to increase in the profit mix.

According to the firm, SMCI’s fiscal 2026 guidance points to a sequential forth-quarter deceleration, but views this as conservatism. It expects momentum to sustain through the second half of the year.

Super Micro Computer, Inc. (NASDAQ:SMCI) designs and manufactures high-performance server and storage solutions for data centers, cloud computing, AI, and edge computing worldwide.

While we acknowledge the potential of SMCI to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than SMCI and that has 100x upside potential, check out our report about this cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.