SMCI Stock Near 3-Month Low: Super Micro’s Earnings Beat Fails To Ease Analyst Concerns Over Margins

• According to Raymond James, the customer accounting for 44% of SMCI’s revenue is most likely SpaceX.
• The firm raised its price target on the stock to $65 from $48 and maintained an ‘Outperform’ rating, 
• Bank of America maintained an ‘Underperform’ rating despite raising its price target, while Mizuho cut its target and kept a ‘Neutral’ rating.

SuperMicro (SMCI) shares dipped to near a three-month low in morning trade on Wednesday, with analysts flagging the company’s dependence on a single customer.

Raymond James raised its price target on the stock to $65 from $48 and maintained an ‘Outperform’ rating, according to a research note cited by TheFly. The firm said Super Micro's latest results and higher full-year forecast were encouraging, but noted that gross margins faced pressure with one customer accounting for 44% of sales.

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According to Raymond James, the customer was most likely SpaceX (SPCX), though Super Micro did not publicly identify it. Customer prepayments covered most of the company's working capital needs, helping ease concerns about cash flow, the firm added.

SMCI stock rose as much as 10% after hours on Tuesday, before paring gains in pre-market trade. At the time of writing, the shares were down 4%, hitting lows last seen in early August. 

SpaceX Link Puts Super Micro’s Customer Concentration In Focus

SpaceX merged with Elon Musk's AI company xAI in February. A few months later, in June, Super Micro CEO Charles Liang posted on X that the company was “proud to co-build another new Gigawatt AI datacenter for SpaceX and XAI within a year.” 

While Super Micro has not officially identified the customer, the post offers a potential clue to Raymond James' assessment.

The unnamed customer accounted for 44% of Super Micro's revenue in its first quarter (Q1) results, up from 28% for the full previous fiscal year, Chief Financial Officer Mark Long said on the company's earnings call Tuesday. 

Long said concentration “at this level is a consequence of the scale at which AI infrastructure is now being built.” He added that he expected it to “stay elevated while these buildouts run.”

AI Demand Drives Revenue Higher, But Margins Contract

Super Micro reported revenue of $19.9 billion in Q1, beating analysts' estimates of $16.26 billion, according to Koyfin. Earnings came in at $1.81 a share, compared with forecasts of $1.23.

The company also raised its revenue forecast for the fiscal year ending June 2027 to $72 billion to $82 billion, from a previous range of $65 billion to $72 billion.

Gross margin fell to 12.7% from 17.6% in the prior quarter. Long attributed the decline to a shift toward AI products, which accounted for 71% of revenue, up from 59%.

Analysts Remain Divided On Super Micro’s Margin Outlook

Bank of America (BofA) also raised its target on SMCI to $39 from $38 but kept an ‘Underperform’ rating. 

The firm said there were “several positives” from the earnings call but said it remains cautious on margins because of competition in AI servers, rising component costs and spending on engineering support and services.

Meanwhile, Mizuho cut its target to $36 from $43 and kept a ‘Neutral’ rating.

How Is Retail Feeling About SMCI Stock?

SMCI stock was among the top trending tickers on Stocktwits at the time of writing. Retail sentiment around the shares shifted to ‘extremely bullish’ from ‘bullish’ over the past day, and chatter jumped to ‘high’ from ‘normal’ levels. Platform data showed an almost 200% increase in message volume in the last 24 hours. 

Most retail traders viewed the earnings and guidance positively despite the stock's decline. Some said the results were overshadowed by short-term political developments ahead of the midterm elections. 

SMCI stock has fallen around 3% year-to-date and is down 36% over the past 12 months.

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