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With a market cap of $22.6 billion, Super Micro Computer (SMCI) is a key player in the technology sector. It specializes in advanced server solutions, addressing the increasing needs of data centers, cloud computing, artificial intelligence (AI), and edge computing.
Last year, short seller Hindenburg Research alleged the company engaged in “accounting manipulation.” Shortly after, its auditor EY stepped down, citing issues related to internal controls and governance. In response, Super Micro formed a special committee to investigate, which ultimately found no evidence of misconduct. The company has since appointed BDO as its new auditor and is actively working to submit its annual report by Feb. 25 to prevent potential delisting from the Nasdaq Exchange.
On Tuesday, Feb. 11, Super Micro released preliminary results for the second quarter of its fiscal 2025, projecting lower-than-expected revenue for the current fiscal year. However, investor sentiment remains positive as the company reaffirmed its ambitious $40 billion revenue target for fiscal 2026 while also alleviating concerns about Nasdaq delisting. As a result, the stock has climbed 33% year-to-date, significantly outperforming the S&P 500 Index’s ($SPX) 3% gain.
The AI Boom: A Silver Lining
Despite last year’s challenges, Super Micro has experienced significant growth, driven by the increasing demand for AI infrastructure. As a key supplier of servers for generative AI applications, the company has benefited from strong partnerships with firms like Nvidia (NVDA). This success led to its inclusion in the S&P 500 Index last year.
Super Micro reported robust preliminary results for the second quarter of fiscal 2025, with projected net revenue between $5.6 billion and $5.7 billion. This marks a 54% year-over-year increase at the midpoint, fueled by continued demand for AI solutions from both existing and new customers. Management stated during the earnings call that this growth was driven by “demand for air-cooled and DLC rack-scale AI GPU platforms. AI-related platforms again contributed over 70% of revenue for Q2 across enterprise and cloud service provider markets.” Adjusted earnings in Q2 are expected to range from $0.58 to $0.60 per share, reflecting a modest 5% YOY growth compared to $0.56 last year.
The company revised its fiscal 2025 revenue guidance from the previous range of $26 billion to $30 billion to a more conservative range of $23.5 billion to $25 billion. However, it maintains an ambitious revenue target of $40 billion for fiscal 2026. Analysts estimate fiscal 2025 revenue at around $24.2 billion, with earnings growth of 24.8%. For fiscal 2026, projections suggest revenue of around $33.6 billion and earnings growth of 33.2%.
Ambitious Revenue Goals: Aiming for the Stars
Super Micro’s 2026 revenue target represents a major jump from its current fiscal 2025 projections of $23.5 billion to $25 billion. While some analysts are skeptical of this bold target, others view it as a strong indication of the company’s confidence in its growth trajectory. During the Q2 earnings call Q&A session, Goldman Sachs analyst Michael Ng questioned the feasibility of SMCI’s $40 billion target. CEO Charles Liang responded by highlighting robust product demand, expanded production capacity, and new customer engagements as key drivers of this anticipated growth.
The company has seen rapid revenue expansion, with 110% growth in fiscal 2023 and 60% in fiscal 2024. For fiscal 2026, Liang expects at least 65% growth, which he considers a “very conservative estimation” based on production capacity. Currently, SMCI’s utilization rates stand at 55% in the U.S., 60% in Taiwan, and just 1% in Malaysia, leaving significant room for scaling production. Additionally, the company’s focus on high-performance computing, AI servers, and liquid-cooled data center solutions is expected to drive further demand. The company is also investing in new product development, including confidential projects, which reinforces management’s confidence in achieving its fiscal 2026 goals.
Another point that came up during the Q&A session revolved around the product mix of NVIDIA’s Hopper and Blackwell GPUs. SMCI confirmed that both architectures are available, with the Hopper-based H200 being a mature product and Blackwell’s GB200 and B200 HGX already in full production. The company is prepared with a 10U air-cooled and a 4U liquid-cooled variant ready for production. CFO David Weigand stressed the importance of maintaining strong margins and outlined how SMCI is positioned to manage pricing pressures, given its dominance in the liquid cooling market — having supplied around 60% of global direct liquid cooling (DLC) solutions last year.
To meet the growing demand, Super Micro is expanding its global manufacturing footprint. The new Malaysia campus is set to begin shipments, while production facilities in Taiwan and Europe are also ramping up. This expansion aims to support long-term growth, diversify revenue streams, and reduce risks tied to any single market. Liang noted that as more data centers worldwide adopt liquid cooling, SMCI’s established expertise in this space gives it a competitive edge. The company’s ability to quickly adapt to new GPU cycles further strengthens its position in the AI-driven data center industry. With all these factors in play, Super Micro is well-positioned to capitalize on the AI boom, reinforcing its leadership in the high-performance computing market.
What Does Wall Street Say About SMCI Stock?
The delayed financial filings and ongoing investigations have created some uncertainty, prompting a cautious approach from certain analysts. On Wall Street, SMCI stock holds a consensus rating of “Hold.” Among the 13 analysts covering the stock, two rate it as a “Strong Buy,” two as a “Moderate Buy,” seven as a “Hold,” and two as a “Strong Sell.”
Plus, not everyone is convinced that SMCI can hit that $40 billion mark. Analysts from firms like Wedbush and JPMorgan have expressed doubts, citing increased competition and supply chain uncertainties. For instance, Wedbush’s Matt Bryson predicts revenues closer to $35 billion and remains cautious about the company's aggressive target.
The stock’s average price target of $49.75 indicates potential 22% upside from current levels. Meanwhile, the highest price estimate of $100 suggests the possibility of a 145.3% surge over the next 12 months.
The Verdict on SMCI Stock
Looking ahead, it’s essential to keep an eye on how SMCI addresses its financial reporting issues. Meeting the filing deadline on Feb. 25 and resolving other accounting concerns will be key to sustaining investor confidence. Despite facing challenges and doubts about its ambitious revenue targets, SMCI’s strong foothold in the AI market presents significant growth potential. Given these factors, I agree with Wall Street’s opinion and view the stock as a “Hold” for now.
