Goldman Sachs explains why SMCI stock price nightmare isn't over yet

Super Micro Computer Inc (NASDAQ: SMCI) has been a volatile ride for investors in the trailing 12 months, but a Goldman Sachs analyst warns that downside momentum is set to continue in 2026.

On Tuesday, Katherine Murphy initiated coverage of the artificial intelligence (AI) server company with a “sell” rating, saying its shares could tumble further to $26 through the end of this year.

The investment firm’s bearish note is exerting significant pressure on SMCI stock, which is down 7% at the time of writing.

Why Goldman Sachs recommends selling Supermicro stock

Supermicro shares have successfully alleviated delisting risk, but that alone doesn’t make it a sound long-term investment, according to Katherine Murphy.

In a research note today, the Goldman Sachs analyst said “limited visibility into profitability” could make it difficult for the AI server specialist to push higher from current levels in 2026.

SMCI’s margins have “halved in the last three years to 9.5%” as it continued to sign large, margin-dilutive deals – and Murphy does not expect that to change anytime soon.

In other words, the investment firm believes Super Micro Computer’s margins could shrink further in the months ahead.

SMCI shares may tumble further as margins continue to shrink

According to Katherine Murphy, Supermicro will likely remain “a leader in the AI server market in the medium term.”

Still, she recommends cutting exposure to SMCI shares as the company depends rather heavily on a single supplier (making up 64% of what it sells).

In fact, the Nasdaq-listed firm drives much of its business from a small group of big customers, which means it doesn’t really have much control over pricing.

Additionally, the Goldman Sachs analyst isn’t particularly excited about Super Micro Computer’s commitment to evolve into a platform name, offering both hardware and software for data centres.

Why? Because software makes up less than 2% of its revenue currently, it suggests the company doesn’t have much of a software foundation to build on.

Plus, it has just 705 employees in the software team compared with Dell’s more than 50,000. This would make it increasingly difficult for SMCI to compete at scale or reach as many customers, she concluded.

SMCI’s technicals are just as concerning in 2026

While Goldman Sachs is concerned primarily about SMCI’s fundamentals, its technicals aren’t any better either.

The sell-off on Jan. 13 pushed Supermicro stock decisively below a key support, coinciding with its 20-day moving average (MA) at the $30 level, indicating bearish momentum may accelerate in the near-term.

Meanwhile, options traders see an even dire picture for Super Micro Computer in the months ahead.

According to Barchart, contracts expiring mid-May have the lower price set at about $20 currently, signalling potential for another 30% decline from here.