Goldman Sachs analyst Katherine Murphy took over coverage of Super Micro Computer (ticker SMCI) and issued a Sell rating. She set a 12‑month target price of $26, down from $34, reflecting worries that the company’s profitability is slipping despite brisk demand for AI server hardware. Murphy noted SMCI holds about 27% share of the tier‑2 cloud and neocloud market in the most recent quarter, keeping it a medium‑term leader in that segment.

However, margins have fallen to 9.5%, roughly half what they were three years ago, and the firm remains exposed to large, low‑margin contracts. A single supplier now accounts for 64% of SMCI’s component purchases, putting the company in a price‑taking position. The analyst also questioned the growth strategy around the Data Center Building Blocks platform, where software contributes less than 2% of revenue and the sales force numbers only 705 reps versus Dell’s 50,000‑plus.

Goldman Sachs projects earnings per share about 10% below consensus and warns further margin erosion could follow.