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Investors may be eying Super Micro Computer (SMCI - Free Report) as a stock that could continue to rebound, with markets receiving a nice boost on Thursday following favorable quarterly results from Taiwan Semiconductor (TSM - Free Report) and Goldman Sachs (GS - Free Report) .
Coinciding with Taiwan Semi’s bullish sentiment regarding the long-term outlook for AI, Super Micro stock spiked as much as 5% in today’s trading session, reversing a steep drop in recent months that led to SMCI trading near its 52-week lows of $25 a share.
Ironically, Super Micro stock had continued to descend in recent weeks after analysts at Goldman Sachs issued a sell rating and set a price target of $26, citing a list of concerns, including shrinking margins, execution risks, and rising competition, among others.
It's certainly a compelling topic of whether Super Micro is still a good tech stock to own, as we are not too far removed from SMCI trading at over $400 a share in 2024 before a 10-1 forward stock split.
To that point, Super Micro had been one of the biggest AI infrastructure winners, being positioned as a “Total IT Solution Provider” for machine learning, high-performance computing (HPC), cloud storage, and 5G/Edge applications.
Super Micro’s Core AI Operations
Super Micro’s AI operations are broad and central to its entire business strategy. The company isn’t just "AI-adjacent", as it builds the hardware infrastructure that powers modern AI, from data-center training clusters to edge-AI systems and even retail AI deployments.
1. AI-Optimized Server Platforms
Super Micro designs high-density, GPU-rich servers specifically for large-language model (LLM) training, AI inference at scale, HPC, and AI cloud workloads.
2. Manufacturing Expansion for Nvidia's AI Chips
Super Micro has expanded manufacturing capacity to support Nvidia’s (NVDA - Free Report) next-generation AI processors, backed by a new $2B credit facility to scale AI-focused inventory and operations.
3. AI-Powered Retail Solutions
Collaborations with partners to build AI-driven intelligent retail stores, using real-time video analytics, loss prevention, inventory optimization, and improved staff efficiency.
4. Edge AI Systems
Super Micro offers a full suite of edge AI solutions, with these systems also designed for small retail, industrial automation, and personalized customer experiences.
Super Micro’s Operational Issues
Despite its intriguing AI endeavors, Super Micro’s growth rate has been decelerating quarter by quarter, even as AI-related demand remains strong. Correlating with such, Super Micro has faced operational issues, including difficulty scaling production efficiently, inventory buildup, and margin pressure despite rising revenue.
It’s noteworthy that Super Micro has experienced nine consecutive quarters of margin decline, and most recently reported negative free cash flow of $950 million in November, as illustrated in the quarterly chart below.
Image Source: Zacks Investment Research
Tracking Super Micro’s Outlook
Based on Zacks estimates, Super Micro’s sales are projected to climb 65% this year to $36.46 billion compared to $21.97 billion in 2025. Furthermore, fiscal 2027 sales are forecasted to spike another 22% to $44.38 billion.
Image Source: Zacks Investment Research
Super Micro’s annual earnings are only expected to rise 2% in FY26 but are projected to soar 42% in FY27 to $2.99 per share. Over the last 60 days, FY26 EPS revisions are very slightly down, with FY27 EPS estimates up 2% from $2.93.
Image Source: Zacks Investment Research
SMCI Average Zacks Price Target
Addressing the elephant in the room, the Average Zacks Price Target for Super Micro stock is $45.53 a share and still suggest 60% upside based on short-term price targets offered by 17 analysts. The Street low price tag of $15 comes from Susquehanna Financial Group, which also rates SMCI as a strong sell, along with Goldman Sachs, with Argus Research having the highest price target of $64 and a strong buy rating.
Image Source: Zacks Investment Research
Super Micro’s Attractive Valuation
Analysts are clearly torn on whether Super Micro will be able to overcome its operational challenges, but the risk-to-reward has become hard to overlook with SMCI trading at 13X forward earnings and less than 1X forward sales.
Super Micro’s price-to-sales ratio is a very steep discount for tech stocks in general, but especially those with AI-driven growth catalyst, with Taiwan Semi having a P/S multiple of 14X, for example, and Nvidia is at 23X. In terms of P/E, SMCI trades more than 40% beneath these tech peers and its Zacks Computer-Storage Devices Industry average of 28X.
Image Source: Zacks Investment Research
Conclusion & Final Thoughts
Reassuringly, Super Micro stock wasn’t falling because of AI demand, which is in fact very strong, but it may be too soon to say that concerns about the company’s execution and profitability are overdone. For now, Super Micro stock lands a Zacks Rank #3 (Hold).
Super Micro could eventually be a good tech stock to own again, and it's tempting to build positions in SMCI at under $30 a share. Still, investors may need more reassurance that Super Micro’s growth will indeed continue, and hopefully, this comes when it reports results for its fiscal second quarter on Tuesday, February 24th.
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Is Super Micro Still a Good Tech Stock to Own?
Investors may be eying Super Micro Computer (SMCI - Free Report) as a stock that could continue to rebound, with markets receiving a nice boost on Thursday following favorable quarterly results from Taiwan Semiconductor (TSM - Free Report) and Goldman Sachs (GS - Free Report) .
Coinciding with Taiwan Semi’s bullish sentiment regarding the long-term outlook for AI, Super Micro stock spiked as much as 5% in today’s trading session, reversing a steep drop in recent months that led to SMCI trading near its 52-week lows of $25 a share.
Ironically, Super Micro stock had continued to descend in recent weeks after analysts at Goldman Sachs issued a sell rating and set a price target of $26, citing a list of concerns, including shrinking margins, execution risks, and rising competition, among others.
It's certainly a compelling topic of whether Super Micro is still a good tech stock to own, as we are not too far removed from SMCI trading at over $400 a share in 2024 before a 10-1 forward stock split.
To that point, Super Micro had been one of the biggest AI infrastructure winners, being positioned as a “Total IT Solution Provider” for machine learning, high-performance computing (HPC), cloud storage, and 5G/Edge applications.
Super Micro’s Core AI Operations
Super Micro’s AI operations are broad and central to its entire business strategy. The company isn’t just "AI-adjacent", as it builds the hardware infrastructure that powers modern AI, from data-center training clusters to edge-AI systems and even retail AI deployments.
1. AI-Optimized Server Platforms
Super Micro designs high-density, GPU-rich servers specifically for large-language model (LLM) training, AI inference at scale, HPC, and AI cloud workloads.
2. Manufacturing Expansion for Nvidia's AI Chips
Super Micro has expanded manufacturing capacity to support Nvidia’s (NVDA - Free Report) next-generation AI processors, backed by a new $2B credit facility to scale AI-focused inventory and operations.
3. AI-Powered Retail Solutions
Collaborations with partners to build AI-driven intelligent retail stores, using real-time video analytics, loss prevention, inventory optimization, and improved staff efficiency.
4. Edge AI Systems
Super Micro offers a full suite of edge AI solutions, with these systems also designed for small retail, industrial automation, and personalized customer experiences.
Super Micro’s Operational Issues
Despite its intriguing AI endeavors, Super Micro’s growth rate has been decelerating quarter by quarter, even as AI-related demand remains strong. Correlating with such, Super Micro has faced operational issues, including difficulty scaling production efficiently, inventory buildup, and margin pressure despite rising revenue.
It’s noteworthy that Super Micro has experienced nine consecutive quarters of margin decline, and most recently reported negative free cash flow of $950 million in November, as illustrated in the quarterly chart below.
Image Source: Zacks Investment Research
Tracking Super Micro’s Outlook
Based on Zacks estimates, Super Micro’s sales are projected to climb 65% this year to $36.46 billion compared to $21.97 billion in 2025. Furthermore, fiscal 2027 sales are forecasted to spike another 22% to $44.38 billion.
Image Source: Zacks Investment Research
Super Micro’s annual earnings are only expected to rise 2% in FY26 but are projected to soar 42% in FY27 to $2.99 per share. Over the last 60 days, FY26 EPS revisions are very slightly down, with FY27 EPS estimates up 2% from $2.93.
Image Source: Zacks Investment Research
SMCI Average Zacks Price Target
Addressing the elephant in the room, the Average Zacks Price Target for Super Micro stock is $45.53 a share and still suggest 60% upside based on short-term price targets offered by 17 analysts. The Street low price tag of $15 comes from Susquehanna Financial Group, which also rates SMCI as a strong sell, along with Goldman Sachs, with Argus Research having the highest price target of $64 and a strong buy rating.
Image Source: Zacks Investment Research
Super Micro’s Attractive Valuation
Analysts are clearly torn on whether Super Micro will be able to overcome its operational challenges, but the risk-to-reward has become hard to overlook with SMCI trading at 13X forward earnings and less than 1X forward sales.
Super Micro’s price-to-sales ratio is a very steep discount for tech stocks in general, but especially those with AI-driven growth catalyst, with Taiwan Semi having a P/S multiple of 14X, for example, and Nvidia is at 23X. In terms of P/E, SMCI trades more than 40% beneath these tech peers and its Zacks Computer-Storage Devices Industry average of 28X.
Image Source: Zacks Investment Research
Conclusion & Final Thoughts
Reassuringly, Super Micro stock wasn’t falling because of AI demand, which is in fact very strong, but it may be too soon to say that concerns about the company’s execution and profitability are overdone. For now, Super Micro stock lands a Zacks Rank #3 (Hold).
Super Micro could eventually be a good tech stock to own again, and it's tempting to build positions in SMCI at under $30 a share. Still, investors may need more reassurance that Super Micro’s growth will indeed continue, and hopefully, this comes when it reports results for its fiscal second quarter on Tuesday, February 24th.