Shares of Super Micro Computer (SMCI) continued to decline on January 13 following a bearish research note from Goldman Sachs senior analyst Katherine Murphy.
Murphy assumed coverage of the AI server specialist this morning, assigning a "Sell" rating and setting a price target of $26. This target suggests potential downside of approximately 9% from current levels.
Her assessment carries weight as SMCI stock has already dropped nearly 50% over the past three months.
In her note, Murphy acknowledged that Super Micro Computer is "a leader in the AI server market." However, she added that "limited visibility into profitability" could make it difficult for the stock to achieve substantial gains in 2026.
The analyst pointed to margin pressures, noting that large, margin-dilutive deals have "halved its margin in the last three years to 9.5%." She expects this trend to persist in the near term.
Murphy advised reducing exposure to Supermicro stock, warning that the company's margin may contract further over the coming quarters.
She highlighted the firm's reliance on a "handful" of core customers, with one reportedly accounting for nearly one-third of current revenue. This concentration limits pricing power, Murphy told clients, making the stock less attractive for 2026.
Additionally, she noted the company's software workforce totals just over 700 employees, far fewer than rivals like Dell, which employs more than 50,000.
The selloff on January 13 pushed SMCI shares below their 20-day moving average, signaling that downward momentum might continue in the weeks ahead.
Despite these concerns, other Wall Street analysts maintain a different view. According to Barchart, the consensus rating on SMCI stock remains "Moderate Buy," with a mean price target of $46 indicating potential upside of about 61%.