Short sellers are feeling the heat as J.P. Morgan upgraded Super Micro Computer (SMCI) from underweight to neutral, citing improved transparency in its pending filings with the U.S. Securities and Exchange Commission and increasing demand for its Blackwell-based server products.

J.P. Morgan raised its price target for the server and storage solutions provider from $35 to $45, reflecting optimism about its financial outlook. Analyst Samik Chatterjee highlighted in a Wednesday report that rising shipments of Blackwell-based servers are expected to command better average selling prices and drive significant revenue growth.

The firm now projects Super Micro’s fiscal year 2026 revenue to reach $39 billion, up from the prior estimate of $34 billion. While future debt issuance and interest payments could influence profitability, the company’s earnings per share are forecasted to be $3.70.

However, in a sign of competitive price pressures, J.P. Morgan slightly adjusted its gross margin projections from 11.2% to 11.1%. Additionally, efforts to enhance internal controls are expected to lead to higher operating expenses.

A key factor bolstering Super Micro’s outlook is a robust sales forecast from Nvidia (NVDA), a major supplier of graphics processing units used in artificial intelligence applications. As enterprises increasingly adopt AI-powered computing infrastructure, Super Micro is well-positioned to capitalize on this growing demand.

This upgrade reflects renewed confidence in Super Micro’s trajectory after prior concerns over regulatory filings. With strong market demand and improving financial forecasts, the company stands to benefit from the ongoing expansion of AI-driven data center investments.