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Analyst Cautions Against Chasing Super Micro (SMCI) Rally Amid Margin Pressures
Analyst Cautions Against Chasing Super Micro (SMCI) Rally Amid Margin Pressures
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BTCCSquare news:
Super Micro Computer's stock surged 8% on Wednesday, rebounding from prior losses after announcing convertible notes issuance. The stock has soared over 50% in 2025, fueled by its agility in deploying servers with cutting-edge chips from Nvidia, AMD, and Intel.
KeyBanc analyst Brandon Nispel initiated coverage with a Sector Weight rating, flagging margin compression and stretched valuations. 'Competitive and structural headwinds may erode long-term profitability,' he warned, noting gross margins have halved from peak levels to 10-11%.
The server market's intense competition overshadows demand growth prospects, with revenue expansion projected to slow to 12% by Q4 FY25. Nispel's analysis suggests the rally may have outpaced fundamentals.
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