Zinger Key Points
- Super Micro shares have been volatile in recent months as investors speculate the company could see some demand weakness.
- JPMorgan analyst Samik Chatterjee says orders remain "robust" and Super Micro’s customer base remains stable.
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Shares of Super Micro Computer Inc. SMCI briefly surged Monday morning before pulling back. The stock is continuing to move lower on Tuesday. Here’s what you need to know.
What To Know: Super Micro shares jumped 10% in pre-market trading Monday after the company received an extension from the Nasdaq for the filing of its annual and quarterly reports. The company delayed the filing of its financials after its independent auditor resigned at the end of October over governance and transparency concerns.
Super Micro shares have been extremely volatile in recent months as investors speculate that the company could see some demand weakness in the wake of the financial reporting delays.
Despite investor concerns, JPMorgan analyst Samik Chatterjee said orders remain “robust” in a new note to clients this week. The analyst shared observations after meeting with Super Micro executives as part of JPMorgan's Annual Hardware & Semiconductors Bus Tour.
Chatterjee noted that Super Micro's customer base remains stable despite market speculation about potential shifts in order allocations to other vendors. Company management reassured investors and analysts that there had been no significant changes in customer orders and expressed confidence in the company’s ability to handle demand. Management also confirmed that the company's manufacturing facility in Malaysia is on track to begin scaling operations in the first half of 2025.
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The JPMorgan analyst said Super Micro is confident that its working capital is sufficient to meet current operational needs, particularly at its current revenue levels of $5.5 to $6 billion per quarter. Management acknowledged that future working capital requirements might increase due to the ramp-up of its Blackwell product line, expected in the second half of fiscal 2025.
Chatterjee pointed to near-term challenges with gross margins, which are expected to decline sequentially quarter-over-quarter. However, management expects gradual improvements in gross margins over time, driven by product mix shifts and manufacturing efficiencies.
On the product front, Super Micro is preparing for the ramp-up of its Blackwell product line, with significant shipments expected by the second half of 2025. Initial volumes will primarily go to Original Design Manufacturers, but the company is working on customized versions of Blackwell-based products to meet specific customer demands.
“The company will continue to work on customized versions of Blackwell based products to support customer demand where customers require better performance than reference designs,” Chatterjee said.
SMCI Price Action: Super Micro Computer shares were down 6.34% at $41.36 at the time of publication, according to Benzinga Pro.
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