Super Micro Computer (SMCI) designs and manufactures high-performance computing solutions, including servers, storage systems, and networking devices. Founded in 1993, the company has a market cap of $21.24 billion and has returned close to 900% to shareholders since February 2015.
However, SMCI faces several challenges, including filing an annual report for its fiscal 2024 and criticism from short seller Hindenburg Research on accounting irregularities and questionable business practices. The resignation of its auditor, EY, citing “unwillingness” to be associated with the financial statements prepared by management, further exacerbates concerns.
Despite these issues, SMCI stock has shown signs of recovery after announcing an expansion in AI data center solutions powered by Nvidia’s Blackwell platform. CEO Charles Liang highlighted a collaboration with Nvidia, which will deliver high-performance computing solutions for AI applications.
The company is set to provide a business update for its fiscal 2025 second quarter tomorrow, which may include revenue and earnings guidance. Analyst estimates project SMCI sales to grow from $14.9 billion in fiscal 2024 to $24.49 billion in fiscal 2025, with adjusted earnings expected to expand to $2.17 per share.
While concerns about regulatory headwinds and narrowing profit margins persist, SMCI stock trades at a cheap valuation of 13x forward earnings. A majority of analysts (8/13) recommend holding the stock, while two recommend “Strong Buy.” The average target price for SMCI stock is $49.56, indicating upside potential of over 30% from current levels.
Source: https://www.barchart.com/story/news/30854111/dear-super-micro-computer-smci-stock-fans-mark-your-calendars-for-february-11