Super Micro Computer (SMCI) shares jump 9% after JPMorgan upgrades to Neutral, raises price target to $45

The stock surged approximately 9% to $42.44 in Friday trading. This brings the company's year-to-date gains close to 40%.

Super Micro Computer shares shot up sharply on Friday, leading the S&P 500 after a significant ratings boost from JPMorgan analysts helped propel the stock higher.

The stock surged about 9% to $42.44. It had already nearly quadrupled in 2023.

However, SMCI shares are still down more than half over the past 12 months. The stock has seen huge swings as it navigates several challenges.

JPMorgan upgraded Super Micro to Neutral from Underweight and raised its price target to $45 from $35.

The upgrade comes as Super Micro appears to have fended off pressing regulatory hurdles. The company recently met a key deadline to maintain its stock market listing.

SMCI had faced possible delisting after falling behind on financial disclosures to the Securities and Exchange Commission. The company filed the required documents last month.

Super Micro's stock had previously come under pressure following accusations of accounting manipulation last August. The allegations led to the resignation of the company's auditor.

JPMorgan analysts appear more upbeat on the company's prospects. They cited strong demand for Super Micro's servers that use Nvidia's new Blackwell chips.

The company is "on the cusp of benefitting from ramp in Blackwell-based server shipments, which we view as significantly higher demand than previous gens are placing a premium on Nvidia to drive max supply on both chips and modules this year," according to the JPMorgan note.

The Wall Street firm raised its fiscal year 2026 revenue forecast for SMCI to $39 billion from $34 billion to reflect an improved supply ramp from Nvidia.

JPMorgan analysts applied a 10x earnings multiple to SMCI shares, up from their previous 9x multiple, but this still compares to an 11x multiple for competitor Dell.

The continued discount reflects ongoing concerns including historical filing challenges, a recent CFO change and an ongoing Department of Justice investigation.

"While we view these headwinds largely known, they continue to weigh on the shares in our view," the analysts warned.

Despite the upgrade, JPMorgan cautioned that Super Micro faces several potential setbacks. The firm noted an "increasingly competitive AI Servers landscape that has led to aggressive pricing and we expect this to continue to impact gross margins."

This competitive pressure could impact the company's gross margins going forward.

JPMorgan also highlighted the prospect of higher interest expenses when the company raises additional capital, which could further pressure profitability.

Super Micro Computer specializes in servers designed for artificial intelligence applications. The company has benefited from the booming demand for AI infrastructure.

Higher average selling prices for its products have helped to boost revenue growth. This trend appears likely to continue as AI adoption accelerates.

The server maker's fortunes are closely tied to Nvidia, which provides the chips that power Super Micro's systems. Improved supply from Nvidia is expected to support SMCI's growth prospects.