Super Micro Computer (SMCI) stock jumped almost 10% in last week’s trading and remains up by about 58% year-to-date. The recent gains are partly driven by news of a possible revival in talks with Iran, which could lead to smoother global supply chains.
The company has been ramping up capacity expansion to meet rising demand for its server systems, particularly in the cloud computing market. SMCI’s balance sheet looks strong, with a debt-to-equity ratio of 8.6% and a cash-to-assets ratio of 23.6%. However, profitability remains a key concern, with margins significantly below those of peers.
Despite these concerns, SMCI stock has shown resilience during downturns. In previous market crashes, the stock fully recovered to its pre-crisis peak within two years. The company has taken steps to address corporate governance issues, but caution is warranted when evaluating SMCI stock.
Investors may want to consider alternative portfolios, such as the Trefis Reinforced Value (RV) Portfolio, which has outperformed its all-cap stocks benchmark in recent times. The RV Portfolio provides a responsive way to make the most of upbeat market conditions while limiting losses during downturns.
Source: https://www.nasdaq.com/articles/whats-new-smci-stock