Bulls vs. Bears: Can Super Micro offset regulatory concerns with Q1 beat

Shares of Super Micro Computer (NASDAQ:SMCI) fell this week as the artificial intelligence server company’s regulatory issues overshadowed its better-than-expected preliminary Q1 FY25 earnings.

However, the San Jose, California-based tech firm set its Q2 fiscal 2025 outlook below consensus amid concerns related to its delayed 10-K filing and the recent resignation of its auditor, Ernst & Young. This week, SA analysts reviewed Super Micro’s (NASDAQ:SMCI) prospects considering the recent updates.

The Bulls

“While Super Micro Computer’s business growth is more likely to be affected by its delayed 10-K filings, the company is well positioned in the rapidly growing liquid cooling data center market,” argued Hunter Wolf Research in Super Micro Computer Q1: Timing Of 10-K Filing Remains Uncertain. “I believe the stock price is undervalued and reiterate a ‘Buy’ rating with a one-year price target of $60 per share.”

“Despite Super Micro Computer’s heavy dip, in my opinion, the current negative market sentiment seems exaggerated, as most of the negative developments are probably already priced in,” added SA Investing Group leader Oakoff Investments in “Super Micro Computer: I’m Doubling Down On This Panic.” “The current discount to SMCI’s valuation seems to be too large, even if it seems fair right now.”

“Despite recent declines, SMCI’s forward P/E ratio of 6.785x and forward P/S ratio of 0.478x make it highly attractive compared to industry peers,” noted Income Generator in “Super Micro Computer: Anatomy Of A Stock Collapse (Technical Analysis).” “The stock’s current trading levels suggest potential for limited downside, with key support at $15.83 and RSI indicating oversold conditions.”

The Bears

“Despite a slight gross margin improvement in Q1’25, it was a weak earnings pre-release. SMCI’s Q2’25 guidance shows no top-line growth Q/Q,” opined The Asian Investor in “Super Micro Computer: The Risk Matrix Has Changed (Rating Downgrade).” “The company’s inability to file overdue financials and a high-profile auditor resignation are two major developments that affect my risk rating negatively.”

“Despite beating revenue estimates in Q1, SMCI faces significant regulatory concerns, including auditor Ernst & Young’s resignation, previous SEC charges, and potential Nasdaq delisting,” wrote Oliver Rodzianko in “Super Micro Computer Q1: Red Flags, Lessons Learned, And Hope Ahead (Rating Downgrade)” “Given the current climate of intense scrutiny for the company, investors who want to get high growth from AI would be wise to look elsewhere for companies that do not show signs of reputational hazard ahead,”