Supermicro (SMCI) shares are dropping as Goldman Sachs analyst Katherine Murphy issues a bearish note, giving it a “Sell” rating and a $26 price target, predicting a 9% downside. SMCI has already lost nearly 50% in the past three months, with limited visibility into profitability potentially hindering gains in 2026.

Super Micro Computer is a leader in the AI server market, but its large, margin-dilutive deals have halved its margin to 9.5% in the last three years. Murphy expects this trend to continue, advising to reduce exposure due to potential further margin shrinkage. The company relies heavily on a few core customers, limiting pricing power and competitiveness.

Despite Murphy’s concerns, other analysts maintain a “Moderate Buy” rating on SMCI, with a mean target of $46 indicating a 61% potential upside. The stock has fallen below its 20-day moving average, suggesting sustained downward momentum. The company’s small software workforce is seen as insufficient to compete against larger rivals like Dell.

Read more at Yahoo Finance: As Goldman Sachs Issues a Warning on Super Micro Computer Stock, Should You Risk Buying the Dip?