Artificial intelligence server company Super Micro Computer, Inc.’s SMCI stock has risen over 1,336% in the last five years, backed by demand for AI hardware and infrastructure in line with the AI boom.
Aswath Damodaran, a Professor of Finance at the Stern School of Business at New York University, proclaimed the need for investments in infrastructure to accomplish AI ambitions.
The launch of ChatGPT in 2022 posed a positive catalyst for the server market, as demand for AI servers increased with the generative AI boom.
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Dell, Super Micro, and Hewlett Packard are the Big 3 Original Equipment Manufacturers of the AI server market. However, “Original Design Manufacturer direct” sales dominate as Microsoft Corp MSFT and its Big Tech peers continue to have their servers custom-made, as per Counterpoint.
Super Micro’s gross margin ranged between 15%-18% in the last three fiscals compared to Hewlett Packard’s 33.4%-35% and Dell’s 22%-24% due to the companies’ diversified product portfolio with potentially higher margin segments.
Also, Super Micro priced its AI servers at a discount versus rivals to win market share, Reuters cited CFO David Weigand during a quarterly earnings call.
Super Micro’s stock value lost 25% in the last six months as auditor Ernst & Young quit in October over governance concerns. The company tapped BDO USA as its new auditor.
Super Micro, scrutinized by a Hindenburg Research report and a U.S. Department of Justice probe for alleged accounting fraud, has until February 25 to file its delayed financial reports. The stock lost its position in the Nasdaq 100 index in December 2024, months after joining it in July 2024.
According to the AI server company’s latest quarterly report, Super Micro’s customers include Intel Corp INTC, Nvidia Corp NVDA, Advanced Micro Devices, Inc AMD, Samsung Electronics SSNLF, and Micron Technology, Inc MU.
Super Micro remains engaged in constructive endeavors, including collaborating with Taiwan’s Guo Rui to form a renewable-energy-powered computation center in Taiwan. Reportedly, Nvidia plans to build a secondary headquarters in Taiwan.
Super Micro launched new AI data center solutions with Nvidia Blackwell, and it has production plants in San Jose, Europe, and Asia.
In January, Super Micro began shipping max-performance servers with Intel Xeon 6900 processors optimized for AI, HPC, and GPU-intensive tasks.
On January 30, Super Micro CEO Charles Liang tweeted about expanding its partnership with Elon Musk’s AI startup, xAI.
On Tuesday, Super Micro reported preliminary second-quarter revenue of $5.6 billion—$5.7 billion (below the $5.89 billion consensus), up 54%.
The company cut its fiscal year 2025 guidance to $23.5 billion—$25 billion from its previous forecast of $26 billion—$30 billion (versus the $24.92 billion consensus). It projected fiscal year 2026 revenue of $40 billion versus the $29.92 billion consensus.
The company expects to file its delayed annual and quarterly reports to the U.S. SEC by the deadline.
Analysts rerated the stock upon the results.
- Wedbush analyst Matt Bryson maintained Super Micro with a Neutral and raised the price target from $24 to $40.
- JP Morgan analyst Samik Chatterjee maintained Super Micro with an Underweight and raised the price target from $23 to $35.
- Needham analyst Quinn Bolton suspended the rating on Super Micro.
Wedbush: Super Micro’s softer, uninspiring results, the vision of a significantly more robust future, and plans to file its financials before the deadline should reduce uncertainty.
Bryson expects the business to expand considerably in the first half of 2026. However, he is also hesitant to model as aggressively as management forecasts.
JP Morgan: Despite the near-term softness, Super Micro surprised with an updated full-year guide, which implied a strong revenue inflection that the company expects will start a robust AI server revenue cycle.
The price target boost reflects increased conviction from the management team to meet regulatory deadlines.
Needham: Super Micro’s preliminary revenue and gross margin results fell slightly short of expectations as customers waited to order new Blackwell systems and aggressive pricing on Hopper products.
Bolton maintained his suspended rating as he awaited the filing of the annual and quarterly reports.
Investors can gain exposure to Super Micro through Vanguard Total Stock Market ETF VTI and Vanguard S&P 500 ETF VOO.
Price Action: SMCI stock closed at $39.68 on Wednesday.
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