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We came across a bullish thesis on Super Micro Computer, Inc. (SMCI) on Value Investing Subreddit Page by MatthewFundedSecured. In this article, we will summarize the bulls’ thesis on SMCI. Super Micro Computer, Inc. (SMCI)'s share was trading at $45.54 as of Feb 25th. SMCI’s trailing and forward P/E were 22.67 and 17.18 respectively according to Yahoo Finance.
A close up of a computer server rack powering the backbone of a wireless infrastructure.
Super Micro (SMCI) has seen extreme volatility surrounding its SEC filing deadline, but its fundamentals remain strong. The company reported $14.98 billion in revenue, reflecting 109.8% year-over-year growth, with net income of $1.21 billion at an 8.1% margin, up 98.5% year-over-year. EPS growth reached 79.3%, and its five-year return of 1,924.2% has outpaced the S&P 500’s 1,844.0%. Compared to peers like Dell, HP, and Western Digital, SMCI’s revenue growth is exceptional, far exceeding the median peer's decline of 0.9%. Its net income margin of 8.1% is nearly double the peer median of 4.4%, with only Arista Networks exhibiting a comparable growth trajectory in the server and networking space.
SMCI’s bull case is compelling, driven by its dominance in high-performance AI-optimized server solutions and a strong partnership with Nvidia for GPU-accelerated computing. Management projects revenue growth to $40 billion by fiscal 2026, and major institutional investors such as Vanguard and BlackRock hold significant stakes. However, the bear case includes a valuation 38.6% above its calculated intrinsic value, negative free cash flow of -$2.47 billion, and concerns arising from the resignation of former auditor EY. Additionally, a Department of Justice investigation into accounting practices and China-related sales, along with the company operating without a permanent CFO, raises red flags.
Despite these risks, SMCI stands at the intersection of two transformative trends: AI acceleration and data center expansion. Its growth trajectory is undeniable, but the valuation reflects high expectations, leaving little room for execution missteps. The stock's dramatic price swings make it a high-risk, high-reward investment, best suited for those comfortable with volatility and proper position sizing. Investors should weigh the company’s long-term potential against the near-term uncertainties, recognizing that while its growth story is real, the path forward may be turbulent.
Super Micro Computer, Inc. (SMCI) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 45 hedge fund portfolios held SMCI at the end of the third quarter which was 33 in the previous quarter. While we acknowledge the risk and potential of SMCI as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than SMCI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.