Needham has reduced its price target on Super Micro Computer to $40.00 from $51.00 while retaining a Buy recommendation on the shares. The move follows a string of quarterly results and forward guidance that outperformed analyst expectations, but also reflects compression in valuation multiples within the AI hardware segment.
Super Micro Computer reported fiscal second-quarter 2026 revenue of $12.68 billion, ahead of the consensus estimate of $10.43 billion. The company set fiscal third-quarter 2026 revenue guidance at $12.3 billion, above analysts' expectations of $10.25 billion. These outcomes sit alongside the company’s reported 34.76% revenue increase over the past year and a five-year compound annual growth rate in revenue of 46%.
Company management attributed the recent revenue beat to a major customer deploying capacity in its data centers. Management also raised the fiscal 2026 revenue outlook to at least $40 billion, up from a prior target of $36 billion.
Needham highlighted momentum for Super Micro Computer’s Direct-to-Chip Blind-Mate Boiling System, or DCBBS, noting that the product accounted for 4% of profit in the first half of fiscal 2026. Management expects the contribution from DCBBS to grow to a double-digit percentage by the end of calendar 2026. Needham said its revised $40 target is based on a 15 times multiple applied to the firm’s new calendar year 2027 non-GAAP earnings per share estimate, and cited multiple compression in the AI hardware sector as a reason for lowering the target.
At the time of the price-target revision, Super Micro Computer shares were trading at $29.67, well below the company’s 52-week high of $66.44. The stock has fallen by nearly 50% over the past six months.
On an earnings front, Super Micro Computer reported fiscal second-quarter diluted earnings per share of $0.69, exceeding estimates from Goldman Sachs and FactSet of $0.50 and $0.49, respectively. Revenue for the quarter was reported at approximately $12.7 billion, above both the company’s earlier guidance range of $10 billion to $11 billion and external analyst expectations.
Broker reactions to the results varied. Rosenblatt reiterated a Buy rating, pointing to a 153% quarter-over-quarter revenue increase the firm attributed to ramped production of the GB300 system. Goldman Sachs maintained a Sell rating with a $27 price target despite the earnings beat. Barclays lowered its price objective to $38 from $43 and kept an Equalweight rating after noting that the company’s revenue exceeded Barclays’ estimate by more than $2 billion.
The valuation picture remains mixed. Needham calculated that the company is trading at a price-to-earnings ratio of 23.29 based on current trading levels. The brokerage’s updated valuation approach and the broader multiple compression in the AI hardware segment were central to its decision to pare back the price target.
Investors and analysts are now weighing the implications of strong top-line performance and upgraded revenue guidance against sector-wide valuation pressures and varied analyst views. The company’s reliance on a large customer deployment and the expected growth trajectory for DCBBS will likely be watched closely as the fiscal year progresses.
Key points
- Needham reduced its price target for SMCI to $40 from $51 while maintaining a Buy rating - impacting equity investors in technology and AI hardware.
- Super Micro Computer reported fiscal Q2 2026 revenue of $12.68 billion and raised fiscal year 2026 revenue guidance to at least $40 billion - relevant to data center and server markets.
- Broker responses were mixed with Rosenblatt reiterating Buy, Goldman Sachs keeping a Sell rating at a $27 target, and Barclays cutting its target to $38 while keeping Equalweight - reflecting divergent views in capital markets.
Risks and uncertainties
- Valuation risk from multiple compression in the AI hardware sector could limit upside - this affects technology and semiconductor hardware valuations.
- Concentration risk tied to a major customer’s data center deployment; if that deployment changes, revenue guidance and growth assumptions could be affected - this impacts data center vendors and server OEMs.
- Analyst disagreement on outlook and target prices introduces market uncertainty, which could contribute to stock volatility - this influences equity market sentiment for the company and comparable names.
Bottom line
Super Micro Computer’s most recent quarter and raised guidance underscore strong demand and product momentum, including early contribution from DCBBS and production ramp of the GB300 system. At the same time, sector-wide multiple compression and mixed broker views have prompted adjustments to price targets and left valuation questions at the forefront for investors.