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Founded in 1993, Super Micro (SMCI) designs and manufactures high-performance computing solutions. Its core business is manufacturing servers, storage systems, and related hardware components using modular and open architecture designs.
Its product portfolio includes rackmount servers, workstations, networking devices, and server management software. The company provides solutions for enterprise data centers, cloud computing, artificial intelligence, and edge computing markets.
Shares of Super Micro Computer have taken investors on a roller-coaster ride over the past year. With a market cap of $21.24 billion, SMCI stock has returned close to 900% to shareholders since February 2015. While SMCI stock has crushed the broader markets, it trades 70% below all-time highs.
Super Micro is facing several issues because it failed to file an annual report for its fiscal 2024, which ended in June. Further, noted short seller Hindenburg Research published a report on Super Micro alleging accounting irregularities and questionable business practices. Notably, the most crucial issue was the resignation of its auditor, EY, who stated they were “unwilling to be associated with the financial statements prepared by management.”
Let’s see if Super Micro Computer stock is a good buy right now.
Super Micro Stock Is Up 26% in 2025
Super Micro stock is showing signs of recovery after it announced the expanded production of AI data center solutions powered by Nvidia’s (NVDA) new Blackwell platform. SMCI CEO Charles Liang highlighted the collaboration with Nvidia, in which it will deliver high-performance computing solutions for AI applications. However, the server maker faces a critical deadline to file delayed regulatory documents with the SEC to maintain its Nasdaq listing.
Super Micro will also provide a business update for the second quarter of its fiscal 2025 tomorrow. While specific details of the update have yet to be announced, Super Micro will likely provide revenue and earnings guidance for fiscal 2025. According to analyst estimates, SMCI is forecast to grow its sales from $14.9 billion in fiscal 2024 to $24.49 billion in fiscal 2025. Comparatively, adjusted earnings are projected to expand from $2.01 per share in 2024 to $2.17 per share in 2025.
The company may highlight its solutions for AI-powered data centers and cloud computing and discuss its strategic positioning in the server and storage solutions market. Further, it could address impacts from potential supply chain disruptions in the semiconductor market.
Is SMCI Stock Undervalued?
While Super Micro Computer is facing multiple regulatory headwinds, the company continues to grow its top line at an enviable pace. For instance, its sales have grown from just $2 billion in 2015 to $14.9 billion in 2024. Alternatively, investors are worried about its narrowing profit margins as its gross margins have fallen from 18% to 14.1% in the last 12 months.
Priced at 13x forward earnings, SMCI stock trades at a cheap valuation. Out of the 13 analysts covering SMCI stock, two recommend “Strong Buy,” one recommends “Moderate Buy,” eight recommend “Hold,” and two recommend “Strong Sell.” The average target price for SMCI stock is $49.56, indicating upside potential of over 30% from current levels.
