The Super Micro Computer logo is seen on a smartphone screen.
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Super Micro Computer shares plunged more than 10% on Wednesday afternoon after the server company upped its top-line guidance but reported third-quarter revenue that slightly missed estimates.
The company on Tuesday posted revenue of $3.85 billion, below the $3.95 billion expected by analysts surveyed by LSEG. Adjusted earnings of $6.65 per share surpassed the $5.78 in earnings per share analysts anticipated.
Super Micro hiked its fiscal 2024 revenue forecast to between $14.7 billion and $15.1 billion, exceeding the $14.6 billion expected, per LSEG.
In 2023, the stock surged 246% on investor hopes that Super Micro, which competes with companies including Dell and Hewlett Packard Enterprise, could be an essential vendor of servers for Nvidia, whose graphics processing units run powerful artificial intelligence models.
Super Micro joined the S&P 500 in March. Its shares are still up 156% this year.
Bank of America analysts reiterated their buy rating on Super Micro while lowering their price target from $1,280 to $1,090, writing in a Wednesday investor note that their “bullish thesis remains intact,” citing the company’s favorable guidance and capacity to capture demand from other chipmakers beyond Nvidia, among other factors.
“Super Micro remains a pure play AI server vendor and we expect continued positive estimate revisions in the long term,” the analysts wrote.
Analysts at JPMorgan, who rate the stock as overweight at a price target of $1,150, praised Super Micro’s business outlook, writing that it “left little to be concerned” about demand and supply gains. Still, they discussed concerns about the company’s readiness to sacrifice on the margins and its need for more capital raises that could dilute earnings.
“We continue to be positively surprised by the robust revenue momentum and the sustained industry demand momentum, with Super Micro’s ramp reinforcing its robust leading position in the market,” the analysts wrote in a Tuesday note.
Also on Tuesday, Wells Fargo analysts, maintaining an equal weight rating on Super Micro stock, dropped their price target from $960 to $890. Analysts at Barclays retained a neutral rating and lifted their price target from $961 to $1,000.
“SMCI maintains a strong competitive moat based on our supply chain checks,” the Barclays analysts wrote.
— CNBC’s Michael Bloom contributed to this report.