Goldman Sachs downgrades Super Micro due to competition

Goldman Sachs has downgraded Super Micro Computer's stock from "neutral" to "sell." The firm now believes the stock could drop more than 20% in the next year. They cut the price target by $8 to $32 per share. The downgrade comes as Super Micro shares have outperformed the market, rising 38.3% this year while the S&P 500 has declined over 3%. Analyst Michael Ng noted that the stock's strong performance makes the risk-reward situation less favorable. Ng pointed out that increased competition in the artificial intelligence server market is a major concern. He mentioned that many competitors are investing in research and development, leading to less product differentiation. This could hurt Super Micro's market share, he added. The company aims for $40 billion in revenue in 2026, but achieving this may be challenging due to rising competition from other manufacturers. Ng predicts Super Micro's gross margins will decline, forecasting 12.2% in 2025 and 11.7% in 2026. Most analysts are cautious about Super Micro. Among 14 analysts, only five recommend buying the stock. The average price target of about $53 suggests there could still be gains ahead. However, Super Micro's stock fell over 2% in premarket trading after the downgrade.