JPMorgan (NYSE:JPM) analysts on Friday cut their rating on Super Micro Computer (NASDAQ: NASDAQ:SMCI) shares from Overweight to Neutral. SMCI stock slipped less than 1% in premarket trading.
The move comes as Wall Street firm anticipates the company to navigate through current challenges, most notably the evaluation of internal controls and delays in regulatory filings.
JPMorgan highlighted the importance of progress on these filings and Super Micro's response to competitive pressures in the AI Server market as critical factors to watch in the near to medium term.
Analysts pointed out that the downgrade is not due to a lack of confidence in Super Micro's ability to regain compliance with regulatory filings nor concerns stemming from the contents of the Hindenburg report.
Instead, the decision is based on “a near-term view where there is a not a clear rationale for new investors stepping into SMCI shares while uncertainty exists around regaining compliance with regulators that is critical beyond the unchanged business fundamentals.”
In addition, it is also driven by the possibility that SMCI could engage in aggressive pricing to retain customers, which could impact margins and elicit a competitive response from industry peers.
“While we expect the company meeting regulatory requirements will potentially be a positive catalyst, we expect investors will also look for evidence of limited changes in customer demand or margin outlooks on account of the recent issues for the shares to fully recover to their prior earnings multiple over time,” analysts continued.
Overall, JPMorgan notes that, given the near-term uncertainty surrounding the company, new investors should wait before taking positions until it regains compliance.
The firm has also reduced its December 2025 price target from $950 to $500, reflecting a lower earnings multiple that aligns more closely with traditional IT hardware companies, which typically experience slower growth.