Nomura analysts downgraded Super Micro Computer (NASDAQ:SMCI) to Neutral from Buy, citing limited potential for further share price increases.
Following Supermicro’s robust guidance for Q4/23 and Q1/24, analysts believe the company’s performance outlook has shifted from easily surpassing low market expectations to having less opportunity to exceed already high expectations.
Nomura’s revised outlook is influenced by uncertainties around the gradual easing of CoWoS-S supply constraints in 2024 and the potential transitional phase between Hopper and Blackwell GPUs in the latter half of the year.
The analysts acknowledge Supermicro’s competitive advantage in advanced liquid cooling solutions, which supports its gross profit margins. However, they caution that limited order visibility due to these uncertainties could make it difficult for Supermicro to exceed sales expectations, presenting a mixed outlook.
Nomura anticipates Supermicro’s quarterly sales to align with its guidance of $5.1-$5.5 billion, noting that some liquid cooling projects have been deferred to later quarters, reducing the likelihood of surpassing the guidance.
Despite these delays, analysts believe that Supermicro maintained its gross profit margin due to its strong market position and better bargaining power, even as its main competitor remained less aggressive in pricing.