Super Micro Computer stock gets higher BofA target as margins tighten

Super Micro Computer stock is facing a sharper investor focus on profitability after Bank of America raised its price target but kept an Underperform rating. In a report covered by Yahoo Finance on Thursday, November 5, the bank lifted its target to USD 39 from USD 38 after Super Micro reported record fiscal first-quarter revenue.

Super Micro reported fiscal first-quarter revenue of USD 19.9 billion for the period ended September 30, 2026, up 298 percent from a year earlier. Adjusted earnings reached USD 1.81 per share, compared with USD 0.35 in the prior-year quarter. The company also raised its fiscal 2027 revenue outlook to USD 72 billion to USD 82 billion from USD 65 billion to USD 72 billion.

AI demand tests profitability

The stronger sales outlook comes with a more demanding margin debate. Adjusted gross margin was 12.8 percent in the fiscal first quarter, above 9.5 percent a year earlier but below 17.6 percent in the fiscal fourth quarter. Yahoo Finance reported that Chief Financial Officer Mark Long linked the sequential decline partly to a larger mix of large AI data-center projects, which generally carry lower margins than enterprise and channel business.

AI-related systems accounted for 71 percent of first-quarter revenue, up from 59 percent in the preceding quarter. Management expects those products to represent 70 percent to 80 percent of revenue for the full fiscal year. Bank of America warned that competition, component costs and the increasing share of lower-margin AI deployments could weigh on profitability, particularly in the second half of fiscal 2027.

Cash conversion remains central

Super Micro used USD 434 million in operating cash flow during the quarter and reported negative free cash flow of USD 481 million. Inventory increased by USD 2.5 billion to USD 15.1 billion at the end of September, underscoring the working-capital demands of large server projects.

The next operating test is fiscal second-quarter revenue guidance of USD 19.5 billion to USD 21.5 billion. Management also expects a gross margin of 12 percent to 12.5 percent for that quarter. For investors, the key question is whether accelerating AI demand can translate into durable earnings and stronger cash generation.

Super Micro Computer stock traded at 25.88 euros on Lang & Schwarz at 13:02 CET on Saturday, November 7, 2026. The real-time quote of Super Micro Computer stock is available separately.

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