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Shares of Super Micro Computer (SMCI) have taken investors on a roller-coaster ride. SMCI stock has returned more than 945% to shareholders in the past decade. However, the tech stock also trades 70% below the all-time highs set in March, valuing the company at a market cap of $20.38 billion.
Since setting that peak about nine months ago, shares of the artificial intelligence (AI) server maker have fallen sharply due to slowing revenue growth, narrowing profit margins, and, more importantly, a slew of regulatory and accounting issues.
Earlier this year, noted short-seller Hindenburg Research accused Super Micro Computer of accounting fraud, self-dealing, and export control violations. Directly after, SMCI delayed the filing of its annual 10-K report, which has dragged shares of the company lower over the past few months amid concerns about its Nasdaq listing status. Super Micro has since submitted a compliance plan to the Nasdaq exchange, and received an extension to file all outstanding reports by Feb. 25.
However, while the shares have rallied off their lows, SMCI stock tanked 5.6% last Wednesday, even as CEO Charles Liang assured investors of its compliance efforts as it works on addressing financial reporting delays. Today, the stock is down another 6% after news broke late Friday that SMCI will soon be removed from the benchmark Nasdaq-100 Index ($IUXX), which it joined as recently as July.
Let’s see if Super Micro stock can rebound over the next 12 months and regain lost ground in 2025.
Super Micro Computer Continues to Grow
Super Micro Computer has increased its sales from $1.95 billion in fiscal 2015 (ended in June) to $14.94 billion in fiscal 2024.
In fiscal Q1 of 2025, its preliminary unaudited results showed that sales grew by 181% yearly to $5.9 billion, while adjusted earnings per share more than doubled to $0.75. Moreover, its gross margins expanded to 13.3%, up from 11.3% in fiscal Q4.
Management said that artificial intelligence (AI) sales accounted for 70% of the top line, driven by strong demand for servers. Despite customers anticipating next-generation GPU releases, its performance was noteworthy, suggesting potential for even stronger quarters over the next 12 months.
Super Micro is positioning itself as a leader in AI infrastructure with several notable achievements:
- Deployed the world's largest direct liquid cooling (DLC) AI supercluster with 100,000 Nvidia (NVDA) GPUs
- Production capacity of 1,500+ DLC GPU racks monthly
- Introduced Super Cloud Composer (SCC) for end-to-end data center management
- Ready to deploy next-gen products, including NVIDIA GB200, AMD (AMD) MI300, and Intel (INTC) Gaudi 3 platforms
To meet strong demand, Super Micro is rapidly scaling its production capabilities. For example, it will begin production in a new campus in Malaysia in the current quarter, and its operations are growing in Taiwan and Europe. At the same time, it plans to add other global manufacturing locations.
What's Next for SMCI Stock?
Super Micro Computer provides direct liquid cooling technology to several large data centers. It expects between 15% and 30% of new data centers to adopt liquid cooling solutions over the next year. In fact, management projects DLC’s market share to grow 10x year over year in 2025.
Super Micro Computer is executing impressively in the AI infrastructure market, with its focus on liquid cooling technology and data center solutions paying off. The company's ability to grow revenue by 181% year-over-year while improving margins demonstrates strong execution and significant market demand.
Out of the 11 analysts covering SMCI stock, one recommends “Strong Buy,” one recommends “Moderate Buy,” seven recommend “Hold,” and two recommend “Strong Sell.” The average target price for SMCI stock is $50.06, indicating an upside potential of 48% from current levels.
Analysts tracking SMCI stock expect revenue to rise to $25 billion in fiscal 2025 and $30 billion in 2026. Comparatively, adjusted earnings are forecast to expand from $2.20 per share in 2024 to $4.27 per share in 2026.
So, priced at 8x forward earnings, SMCI stock is available at a bargain and positioned to deliver sizeable gains to shareholders. However, particularly ahead of expected selling from institutional holders amid the Nasdaq-100 rebalancing, investors may want to wait until the company is cleared of any regulatory wrongdoing before buying the growth stock.
