Needham Lowers Super Micro (SMCI) Price Target to $40, Keeps Buy

Sajjl Nooranne

Sun, February 22, 2026 at 9:27 PM GMT+9 2 min read

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  SMCI

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We recently published an article titled 12 Best Data Storage Stocks to Buy Right Now.

On February 4, Needham lowered its price target on Super Micro Computer, Inc. (NASDAQ:SMCI) to $40 from $51 while maintaining a Buy rating. The firm attributed the company’s second-quarter earnings outperformance to a large-scale data center deployment by a major customer and highlighted increasing adoption of its Data Center Building Block Solutions platform, although the revised target reflects sector-wide valuation compression in AI hardware.

For the second quarter, Super Micro Computer, Inc. (NASDAQ:SMCI) reported record revenue of approximately $12.7 billion, representing 123% year-over-year growth and 153% sequential growth, exceeding prior guidance of $10 billion to $11 billion and including approximately $1.5 billion of delayed first-quarter shipments. GAAP EPS was $0.60 versus guidance of $0.37 to $0.45, while non-GAAP diluted EPS reached $0.69 compared to guidance of $0.46 to $0.54. Non-GAAP operating expenses declined to 1.9% of revenue, reflecting substantial operating leverage compared to 4.1% in the prior quarter.

Management guided third-quarter fiscal 2026 revenue of at least $12.3 billion and increased full-year fiscal 2026 revenue guidance to at least $40 billion, with anticipated gross margin improvement of approximately 30 basis points sequentially. Ongoing expansion of manufacturing capacity across Silicon Valley, Taiwan, Malaysia, the Netherlands, and the Middle East, combined with automation and modularization initiatives, supports scalable production and margin enhancement, reinforcing the company’s positioning within the AI infrastructure buildout.

Super Micro Computer, Inc. (NASDAQ:SMCI), founded in 1993 and headquartered in San Jose, California, designs and manufactures high-performance server and storage systems for data centers, cloud computing, artificial intelligence, 5G, and edge computing markets.

While we acknowledge the potential of SMCI as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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