Investing.com -- Super Micro Computer (NASDAQ:SMCI) stock received an upgrade at JPMorgan, to Neutral from Underweight, after the AI server maker “has cycled past the uncertainty” related to SEC filings and the anticipated benefits from increased demand for Blackwell-based server shipments.

JPMorgan analysts also pointed to the higher average selling prices (ASPs), which are contributing to revenue growth but voiced caution regarding potential margin pressures due to a competitive market landscape and elevated expenses aimed at improving internal controls.

The Wall Street firm has lifted its SMCI revenue forecasts for the next 12 months, driven by recent positive developments, including a better supply ramp from Nvidia (NASDAQ:NVDA).

Still, the bank remains wary of gross margin trends, expecting moderation in fiscal year 2026 (FY26) compared to FY25, which could constrain operating margin expansion and earnings per share (EPS) growth relative to revenue.

JPMorgan has also raised its December 2025 price target for SMCI to $45, up from the previous target, applying a 10x earnings multiple as opposed to the former 9x multiple.

However, the firm still applies a modest discount compared to peer company Dell (NYSE:DELL), which trades at an 11x multiple, due to Super Micro's historical audit and filing challenges and ongoing issues such as a CFO change and a Department of Justice investigation.

These headwinds “will likely be an overhang on the earnings multiple,” analysts led by Samik Chatterjee said.

The updated forecasts for FY26 include a significant revenue increase to $39 billion from the prior $34 billion, marking a 65% year-over-year growth. At the same time, JPMorgan has slightly reduced its gross margin forecast to 11.1% from the previous 11.2%. These revisions result in a raised EPS forecast of $3.70, up from $3.25.

Analysts expect Super Micro to face working capital challenges starting in the fourth fiscal quarter of 2025 and into FY26.

The company is anticipated to invest heavily in inventory to support revenue growth, which may lead to additional debt raises beyond the recent convertible note offering. This is projected to increase interest expenses in FY26 and FY27, potentially limiting the upside to EPS, analysts added.

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