SMCI Should I Buy
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SMCI is not a good buy right now. The stock is in a clear downtrend (bearish moving-average stack) and is trading below the key pivot (31.36) while sitting near support (~29.63). Options positioning is modestly bullish (call-leaning), but fundamentals (revenue, net income, and gross margin) are weakening and Wall Street price targets have recently been cut. With no Intellectia proprietary buy signal (AI Stock Picker or SwingMax) to override these risks, the better call is HOLD/avoid initiating a new position at this level.
Trend: Bearish. Moving averages are stacked bearishly (SMA_200 > SMA_20 > SMA_5), consistent with a sustained downtrend. Momentum: MACD histogram is positive (0.0996) but contracting, implying upside momentum is fading rather than accelerating. RSI: RSI_6 at 32.73 is near oversold territory, which can support a short-term bounce, but it is not a strong reversal signal by itself. Levels: Immediate support is S1 ~29.63 (price 29.23 is slightly below this), then S2 ~28.57. Overhead resistance is the pivot 31.36, then R1 33.08. Interpretation: Technically this looks like a weak tape with a possible oversold bounce setup, but the dominant trend remains down until price reclaims ~31.36 and holds.
Intellectia Proprietary Trading Signals
Near-term oversold setup: RSI near oversold can fuel a reflex bounce, especially if the market stabilizes.
AI infrastructure demand narrative: News mentions expanding role in AI infrastructure, partnerships, and major clients; this can re-ignite momentum if execution improves.
Upcoming earnings catalyst: QDEC 2025 earnings on 2026-02-03 (after hours). If December-quarter growth and margins surprise positively, the stock can re-rate quickly.
Options sentiment: Call-leaning put/call ratios point to some expectation of upside.
Primary risk is trend: The stock remains in a confirmed downtrend with bearish moving averages; rallies can fail at resistance (31.36/33.08).
Margin pressure: News highlights profit margin challenges; gross margin is already low and declining (see financials).
Fundamental deceleration: Revenue and net income fell sharply YoY in the latest reported quarter; that weakens the ‘buy now’ case.
Analyst target cuts: Multiple firms lowered price targets recently, signaling reduced near-term conviction.
No politician/congress signal: No recent congress trading data available to support a sentiment tailwind.
Latest quarter: 2026/Q1. Revenue: $5.02B, down 15.49% YoY (contraction). Net income: $168.3M, down 60.34% YoY (sharp profitability deterioration). Gross margin: 9.31%, down 28.71% YoY (continued margin compression). EPS: $0.25, up 257.14% YoY, but this conflicts with the net income decline and appears influenced by non-operating items/share count dynamics; the broader message from revenue/net income/margin is weakening core performance.
Recent trend: Mixed but skewing cautious. Several target cuts with Neutral stances (Citi to $39 from $48; Mizuho to $31 from $45), while Goldman remains Sell (raised PT to $34 from $30). There are pockets of bullishness (Argus upgraded to Buy with a $64 PT; Northland Outperform; KGI upgraded to Outperform). Wall Street pros: AI server demand and potential large platform wins/December-quarter rebound, plus regulatory/file compliance issues viewed as ‘behind them’ by some. Wall Street cons: Ongoing gross margin/profitability risk in a highly competitive AI server market and evidence of slowing growth/volatile execution.
