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Super Micro Computer (NASDAQ:SMCI) plunged 16% on early trading Wednesday after the company's preliminary Q3 fiscal 2025 results fell short of guidance, and analysts warn the miss could cast a shadow over broader AI-related names.
Wells Fargo's Aaron Rakers noted that Nvidia (NASDAQ:NVDA) drives at least 60% of Supermicro's purchases and that the negative preannouncement would not be taken as a read-through for AI-driven names, given hyperscalers' cautious capex stance on new Blackwell-platform cycles.
J.P. Morgan's Samik Chatterjee, however, downplayed any industry-wide slowdown, attributing the shortfall to specific customer decisions on platforms which shifted in relation to timing rather than a drop in demand or supply constraints.
Morgan Stanley retains a Neutral call on SMCI but trims its price target to $36 from $39, arguing that margin headwinds tied to NVIDIA Hopper products will prove short-lived and that inventory write-downs are a temporary drag.
Mizuho's Vijay Rakesh echoes the caution, pointing out that near-term ramps with GB200, H20 and aggressive pricing from Dell (NYSE:DELL) are squeezing Supermicro's market share. He keeps a Neutral rating but cuts his target to $34 from $50.
Investors should care because Supermicro's stumble highlights the risks for hardware suppliers in an AI capex cycle that may be peaking. A widening risk premium on SMCI could pressure other small-cap AI infrastructure players if hyperscalers pull back or favor incumbents like Dell.
Moreover, With full Q3 results due in mid-May, markets will be looking for updated revenue and margin guidance, along with any commentary on customer inventory positions and the timing of Blackwell-platform shipments. A clearer picture on these fronts could either revive Supermicro's beaten-down shares or cement a more cautious stance on the AI hardware supply chain.
Super Micro Computer has shed roughly 6.6% over the past six months, sliding back to $30.88 after a frenzied mid-February peak near $55. That 45% drop into early March wiped out most of the prior rally from sub-$20 in late November, highlighting just how quickly sentiment can reverse on elevated AI expectations. Since mid-March, shares have churned in a $32$36 range, but this week's dip under $31 tests a key support zone last seen in January.
Supermicro's roller-coaster ride suggests investors may demand proof of sustainable revenue before bidding the stock back up. A decisive break below $30 could open the door to a retest of the $28 level, while a rebound past $36 would be needed to signal renewed momentum.
This article first appeared on GuruFocus.