Citi Is the Latest Bank to Sour On Super Micro Computer Stock

"Citi has cut its price target for Super Micro Computer to $25 from $39, maintaining a Neutral rating due to export-control allegations that elevate reputation risk. The indictment charges co-founder Yih-Shyan 'Wally' Liaw with conspiring to smuggle advanced Nvidia AI chips to China, which has led to his resignation from the board. This reputational damage adds to the challenges faced by the company, as its GAAP gross margin has compressed significantly."

"SMCI's Data Center Building Solutions platform and Blackwell Ultra GPU server ramp position it within the fastest-growing segment of enterprise tech spending. The company reported over $13 billion in Blackwell Ultra orders as of Q1 FY2026, indicating strong long-term revenue potential. This demand for AI infrastructure is a key driver of SMCI's stock performance and future growth prospects."

"In Q2 FY2026, Super Micro Computer achieved revenue of $12.68 billion, reflecting a year-over-year growth of 123.36%. The company has provided full-year guidance of at least $40 billion, suggesting that if this growth trajectory continues, it could support a materially higher valuation floor over time. Currently, SMCI trades at a forward P/E of approximately 8x, which is significantly below historical norms for a high-growth AI company."

Super Micro Computer's stock has fallen 32% recently, with analysts expressing bearish sentiments. The consensus price target is $40.73, but Citi has lowered its target to $25 due to export-control allegations against co-founder Yih-Shyan 'Wally' Liaw. These allegations increase reputation risk and warrant a lower valuation. Despite this, SMCI's AI infrastructure demand and significant revenue growth indicate potential for recovery. The company reported $12.68 billion in revenue for Q2 FY2026, with a full-year guidance of at least $40 billion, suggesting a higher valuation floor over time.

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