SMCI Rated Outperform by Raymond James Amid Dominance in Branded AI Server Market - Hewlett Packard (NYSE:HPE), Dell Technologies (NYSE:DELL)

Raymond James has initiated coverage on Super Micro Computer SMCI with an Outperform rating. This move comes in light of Supermicro’s strong standing in the AI-optimized infrastructure sector and its swift revenue growth.

What Happened: AI platforms constitute approximately 70% of Supermicro’s revenue, positioning it as a dominant player among branded server vendors. Raymond James has set a $41 price target for the company, projecting Supermicro’s FY26 revenue at $29.8 billion with an EPS of $3.03, indicating a compound annual growth rate (CAGR) of over 25%, reported Investing.com.

Raymond James highlighted that Supermicro has effectively carved out a niche for itself and “positioned itself in a sweet spot” between traditional branded IT vendors such as Dell DELL, Hewlett-Packard Enterprise HPE and contract manufacturers like Quanta.

The firm noted that while Supermicro has shown impressive growth, its valuation was impacted by past performance inconsistencies and internal control issues, which caused delayed SEC filings and auditor changes. These problems have since been resolved with no misconduct found.

Why It Matters: Supermicro’s financial performance has been under scrutiny, especially following its Q3 results in 2025. The company reported quarterly earnings of 31 cents per share, missing the analyst consensus estimate of 50 cents by 38%. Its quarterly revenue of $4.6 billion also fell short of the analyst consensus estimate of $5.42 billion by 15.1%.

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CEO Charles Liang said the company isn’t providing fiscal 2026 guidance due to tariff-related uncertainty, noting that "economic uncertainty and tariff impacts may have a short-term impact,” reported CNBC.

Despite these financial setbacks, Raymond James remains optimistic about Supermicro’s future, particularly due to its robust position in the AI-optimized infrastructure sector. The firm’s bullish stance is further supported by Supermicro’s plans to expand its U.S. manufacturing to produce 1,500 liquid-cooled AI racks per month.

SMCI stock surged 16.02% to close at $38.89 on Tuesday. On a year-to-date basis, it soared over 29%.

SMCI holds a momentum rating of 40.25% and a growth rating of 93.38%, according to Benzinga’s Proprietary Edge Rankings. The Benzinga Growth metric evaluates a stock's historical earnings and revenue expansion across multiple timeframes, prioritizing both long-term trends and recent performance.