Super Micro Computer stock is on the cusp of recovery, though its path forward is challenged in a increasingly competitive landscape, said analysts at J.P. Morgan.

Analysts led by Samik Chatterjee upgraded Super Micro shares to Neutral from Underweight and boosted the price target to $45 from $35. Super Micro stock was up 3% to $40.27, with Chatterjee’s new price target suggesting a potential 12% upside.

The upgrade came just weeks after Super Micro met the deadline to file its delayed annual and quarterly reports with the Securities and Exchange Commission, narrowly avoiding delisting from the Nasdaq exchange.

The analysts argued that the company “cycled past the uncertainty in relation to pending SEC filings” and was positioned to benefit from ramping demand for its servers powered by Nvidia Blackwell chips.

In their view, Super Micro is one of the leading players in the AI server market due to its next-generation graphics processing units and broader technical capabilities in areas like liquid cooling.

J.P. Morgan raised its fiscal 2026 revenue forecast on Super Micro to $39 billion from $34 billion, “led by our expectations for better revenue progression with improving datapoints in relation to supply from Nvidia,” the analysts wrote.

However, the upcoming strength is partially offset by “potential concerns around margin trajectory,” as mounting competition drives aggressive pricing and gross margin pressures, the analysts said.

The J.P. Morgan team expects to see “significant” working capital headwinds beginning in the fourth quarter of fiscal 2025 and stretching into the following year, “with the company expected to invest significantly in inventory to support revenue growth.”

The analysts forecast additional debt raises beyond the recent convertible note offering in February, which increases their forecasts for interest expenses and serves to limit earnings-per-share upsides, they wrote.