San Jose, California-based Super Micro Computer, Inc. (SMCI) develops and sells high performance server and storage solutions based on modular and open architecture. Valued at a market cap of $19.7 billion, the company provides its products to enterprise data centers, cloud computing, artificial intelligence, 5G, and edge computing markets.  

This computer hardware company has considerably underperformed the broader market over the past 52 weeks. Shares of SMCI have declined 60.3% over this time frame, while the broader S&P 500 Index ($SPX) has surged 8.2%. However, on a YTD basis, the stock is up 8.1%, outpacing SPX’s 4.7% downtick.  

Narrowing the focus, SMCI has also lagged behind the Technology Select Sector SPDR Fund’s (XLK) 4.3% gain over the past 52 weeks. Nonetheless, it has outpaced XLK’s 8.1% decline on a YTD basis.  

SMCI delivered its Q3 earnings results on May 6, after market close. The company posted revenue of $4.6 billion, a 19.5% increase from the year-ago quarter, driven by strong growth in its Data Center Building Block Solution (DCBBS), Direct Liquid Cooled-2 (DLC) systems, and advancements in AI technology. However, compared to the previous-year quarter, its income from operations dropped sharply by 61.2% to $146.8 million due to a significant increase in its cost of sales and operating expenses. As a result, its adjusted earnings fell 53% from the prior-year figure to $0.31 per share. Additionally, the company lowered its fiscal 2025 revenue forecast, now expecting revenue to fall within the range of $21.8 billion to $22.6 billion. 

For the current fiscal year, ending in June, analysts expect SMCI’s EPS to marginally decline year over year to $2. The company’s earnings surprise history is disappointing. It missed the consensus estimates in two of three quarters, while surpassing on one occasion.                                             

Among the 16 analysts covering the stock, the consensus rating is a “Hold” which is based on four “Strong Buy,” two “Moderate Buy,” eight “Hold,” and two “Strong Sell” ratings.   

This configuration is slightly more bullish than two months ago, with three analysts suggesting a “Strong Buy” rating.  

On Apr. 30, JPMorgan Chase & Co. (JPM) maintained a “Neutral” rating on SMCI and lowered its price target to $36, which indicates a 9.3% potential upside from the current levels.  

The mean price target of $51.22 represents a 55.5% potential upside from SMCI’s current price levels, while the Street-high price target of $100 suggests an ambitious upside potential of 203.6%.