Super Micro Computer (SMCI) shares are rising on Wednesday even though the artificial intelligence (AI) server specialist’s fiscal third-quarter revenue missed consensus estimates by more than $2 billion.
Investors are applauding SMCI primarily because management forecast at least $0.65 earnings per share (EPS) on up to $1.5 billion in revenue for the fourth quarter, both comfortably above Wall Street expectations.
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The post-earnings rally helped Super Micro break above its 100-day moving average (MA) on May 6, indicating that the bullish momentum could sustain in the coming days.
At the time of writing, SMCI stock sits near its year-to-date high of $34.38.
Rosenblatt raises price target on Super Micro stock
While SMCI stock is already up about 60% from its recent low, Rosenblatt Securities believes it will rise from here as the year progresses.
The company’s analysts were encouraged by SMCI’s gross margin improvement, which hit 10.1%, a huge jump from 6.4% in the second quarter, with expectations of a near-term return to the low percentage range.
Additionally, the company’s direct liquid cooling (DLC) and “AI factory” core components are important drivers of long-term profitability, they told clients in a research note dated May 6.
All in all, Rosenblatt now expects SMCI to hit $40 per share this year thanks to continued demand for AI infrastructure.
SMCI Stock Will Still Be Attractively Priced in 2026
Beyond margin recovery and impressive guidance, SMCI stock’s long-term value proposition lies in the company’s role as a leading one-stop shop for AI infrastructure.
The Nasdaq-listed company is evolving from a server manufacturer to a total IT solutions specialist, significantly increasing customer loyalty.
By integrating networking, storage and proprietary liquid cooling software at the rack level, SMCI is capturing a greater proportion of capital spending from Tier 1 cloud providers and sovereign AI projects.
Still, Super Micro is currently looking to earn less than 15 times forward earnings, a steep discount compared to its AI peers.
In summary, with a strong high-value AI order book and a track record of May, June and July closes in the green, Super Micro Computer remains an attractive option for long-term investors.
