Citi analyst Asiya Merchant initiates coverage on Super Micro Computer (NASDAQ: SMCI) with a Neutral rating and a price target of $39.00.

The analyst comments: "We initiate coverage on Supermicro with a Neutral/High Risk rating and $39 target price representing ~12% ETR. With 8% of AI server revenue share, Supermicro remains one of the leading players to GPU-as-a-Service cloud providers and enterprises, and we expect Supermicro to continue to benefit from broader secular trends in AI-driven infrastructure. However, our positive view is counterbalanced by an increasingly competitive AI Server landscape pressuring margins. Following a volatile 2023 and 2024 that saw significant multiple expansion (AI boom and strong yy growth) and contraction (margin pressures, SEC filing delays), shares are currently trading at 9-10x NTM PE, below is 5-year median (11-12x), which we believe is warranted and reflects the current macro-related (tariff uncertainty) and competitive intensity concerns."

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Shares of Super Micro Computer closed at $35.81 yesterday.