Supermicro (SMCI) was in focus as investment firm Argus upgraded shares to Buy after the company released its first-quarter results and outlook earlier this week.
Shares rose 1.5% in premarket trading on Thursday.
“In our view, missteps by the company on revenue delivery and margin shortfalls are fully reflected in the share price, while the potential for strong forward momentum is being overlooked,” Argus analysts wrote in a note to clients. They raised their rating on Supermicro to Buy from Hold and put a $64 price target on the stock.
And given that Supermicro is now compliant with the Nasdaq on all filing requirements, any regulatory issues should be put to bed, the analysts added.
Additionally, the analysts said that generative artificial intelligence is driving “massive demand” for the company’s applications and require liquid-cooled rack-scale solutions. And while shares are up more than 50% year-to-date, Supermicro trades at less than half the peak it was in early 2024, the analysts pointed out.
“The company has built a $13 billion backlog of Nvidia Blackwell-based platforms and is now also shipping product based on MD MI300X series GPUs,” the analysts wrote.
They continued: “The company in February 2025 ramped full production of Nvidia Blackwell rack-scale solutions equipped with Nvidia HGX B200 GPUs and is now ramping B300 and GB300 Nvidia platforms. With the bounce on Saudi deal news followed by an 18% selloff in August on 4Q25 earnings, SMCI in our view still faces some degree of investor skepticism. We believe the shares are undervalued based on growth prospects ahead.”