Super Micro Computer, Inc. (SMCI.US) wins DataVolt large order but Goldman Sachs Group, Inc. goes against the trend and reiterates "sell" rating.

On Wednesday, Goldman Sachs Group, Inc. analyst Michael Ng maintained a "sell" rating on Super Micro Computer, Inc. (SMCI.US) with a target price of $24, despite Super Micro Computer, Inc. recently announcing a multi-year agreement worth $20 billion with DataVolt, focusing on GPU platforms and rack systems to be deployed in DataVolt's data centers in Saudi Arabia and the United States. The company has shown strong growth momentum, with revenue growing by 82.49% in the past 12 months, despite a relatively low gross profit margin of only 11.27%. This deal is related to DataVolt's investment in the new data center park in Neom, which is expected to be operational by 2028 with development costs exceeding $5 billion and a capacity of 300MW. While the exact details of the agreement, including whether it is a single-source or multi-source contract, its profit margin, exact timing, and whether it is a Memorandum of Understanding (MoU) or a binding contract, have not been disclosed, the agreement is seen as a positive development for Super Micro Computer, Inc. As a result, Super Micro Computer, Inc. stock rose by 15.71% on Wednesday, closing at $45. Goldman Sachs Group, Inc. recognizes the potential impact of this deal and suggests that it may signal the expansion of artificial intelligence infrastructure beyond current major players, including a broader customer base. If this deal is for a period of five years with a profit margin of 5%, with the entire $20 billion belonging to IT hardware revenue, this could mean annual revenue of $4 billion for Super Micro Computer, Inc. and EBIT of $200 million. Nevertheless, Goldman Sachs Group, Inc. maintains its "sell" rating. Super Micro Computer announced a significant partnership with DataVolt worth $20 billion, expected to boost the company's visibility and potentially lead to upward guidance. This collaboration highlights Super Micro Computer, Inc.'s strategic direction and is expected to have a positive impact on its operations and financial performance in the coming years. Additionally, Super Micro has started shipping servers equipped with AMD's latest EPYC 4005 series processors, designed to increase data center computing density and reduce overall ownership costs. This is part of the company's ongoing innovation efforts to provide powerful and cost-effective solutions for cloud service providers and enterprises. However, other investment firms are bullish on the boost this deal will bring to Super Micro Computer, Inc. Raymond James maintains a "hold" rating on Super Micro Computer, Inc. with a target price of $41, citing the company's leadership position in artificial intelligence infrastructure and strategic initiatives such as expanding U.S. manufacturing and adopting NVIDIA Corporation's Blackwell platform. Meanwhile, Needham reinstated a "buy" rating on Super Micro with a target price of $39, highlighting Super Micro Computer, Inc.'s position in the artificial intelligence and high-performance computing market; despite recent performance challenges, Needham is confident in the company's future prospects as management has been strengthened and risk factors have been addressed. Rosenblatt Securities lowered Super Micro's target price from $55 to $50, while maintaining a buy rating. This adjustment reflects caution due to anticipated delays in shipments of NVIDIA Corporation's upcoming Blackwell GPU platform by customers. Despite these challenges, Rosenblatt remains optimistic about Super Micro's growth, driven by strong demand for new systems and expectations for revenue in the coming quarters.