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SMCI vs. FN: Which AI Infrastructure Stock is Safer to Retain?
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Key Takeaways
SMCI is expanding AI rack-scale systems and liquid cooling, but rising inventory remains a concern.
Fabrinet's fiscal Q4 2026 data center revenues surged 68% year over year to $669 million.
Fabrinet is expanding manufacturing capacity and preparing hyperscaler-direct transceiver programs.
Super Micro Computer (SMCI - Free Report) and Fabrinet (FN - Free Report) are two prominent AI value chain suppliers benefiting from the expansion of AI infrastructure, but they occupy different parts of the supply chain. While Super Micro Computer offers a broad portfolio of rack-scale Total IT Solutions, including complete servers, storage systems, blade servers, subsystems and server management software, Fabrinet provides advanced optical packaging and precision optical, electro-mechanical and electronic manufacturing services to original equipment manufacturers.
With the AI industry growing, both stocks are set to benefit. So the question remains: Which stock has more upside potential? Let’s break down their fundamentals, growth prospects, market challenges and valuation to determine which offers a more compelling investment case.
The Case for SMCI Stock
Super Micro Computer remains positioned to benefit from expanding AI infrastructure demand, supported by rapid adoption of new GPU platforms, its modular Building Block architecture, liquid-cooling expertise and a broader Data Center Building Block Solutions (DCBBS) offering. The company is benefiting from its emphasis on early availability of new AI systems as a competitive advantage. In fourth-quarter fiscal 2026, the company was shipping volume products across NVIDIA’s GB300 NVL72, HGX B300, B200 NVL4 and RTX 6000 Pro lines.
It is also preparing systems based on NVIDIA Vera Rubin and Vera CPU platforms. With AMD, Super Micro Computer launched the Helios product line and MI450 Total Solution while continuing to support MI350 and MI355X systems. Super Micro Computer is adding enterprise and channel customers. Enterprise and channel revenues represented 31% of fiscal 2026 sales and increased 39% year over year. In fourth-quarter fiscal 2026, the category accounted for 50% of revenue compared with 28% in the prior quarter, as customers upgraded compute, storage and networking infrastructure.
The company also increased the number of customers generating more than $1 billion of annual revenue to nine in fiscal 2026 from four in fiscal 2025. SMCI is positioning itself as a one-stop provider for the infrastructure required to build and operate AI factories and modern data centers with its DCBBS that combine rack-scale systems, networking, power, cooling, software and deployment services into an integrated solution. This approach can simplify data center construction and help customers accelerate the deployment of increasingly power- and cooling-intensive AI infrastructure.
The portfolio includes liquid-cooling solutions, such as in-rack coolant distribution units (CDUs), chilled doors and cooling towers. The company says its in-rack CDUs can support cooling capacity of up to 250 kilowatts, while cooling towers can support between 1 and 50 megawatts. Such capabilities are increasingly important as high-performance AI systems generate substantially more heat than conventional computing workloads. DCBBS also includes 400G/800G networking solutions, power shelves capable of providing up to 33 kilowatts per shelf, battery backup systems and generators.
However, Super Micro Computer continues to carry a large inventory position while AI hardware platforms transition quickly. Inventory increased to $12.9 billion as of June 30, 2026 from $11.1 billion at the end of the third quarter and $4.7 billion as of June 30, 2025. Days of inventory rose to 119 days in fourth-quarter fiscal 2026 from 106 days in the prior quarter. SMCI’s profitability continues to vary sharply with customer and product mix. Non-GAAP gross margin rose to 17.6% in fourth-quarter fiscal 2026 from 10.1% in the prior quarter, but management said about 75% of the sequential improvement came from favorable mix, including contracts that shifted into fiscal 2027.
For the first quarter of fiscal 2027, Super Micro Computer expects net sales to be in the range of $14.5-$15.5 billion, with non-GAAP adjusted earnings of $1.01-$1.10 per share. The Zacks Consensus Estimate for SMCI’s first-quarter fiscal 2027 earnings is pegged at $1.24 per share, indicating year-over-year growth of 254.3%. Estimates have been revised upward over the past seven days.
Image Source: Zacks Investment Research
The Case for FN Stock
Traction in advanced optical packaging and precision optical, electro-mechanical and electronic manufacturing services is acting as a tailwind for Fabrinet. Fabrinet’s fourth-quarter fiscal 2026 data center revenues reached $669 million, up 68% year over year and 13% sequentially, and represented 51% of revenue. DCI was the largest contributor to data center growth, with an annualized run rate above $1 billion, while HPC also increased sequentially as next-generation programs ramped.
Fabrinet’s communications infrastructure revenues rose 40% year over year to $413 million. Management expects first-quarter fiscal 2027 revenues of $1.375-$1.425 billion, implying 43% year-over-year growth at the midpoint, with sequential gains expected across data center, communications infrastructure and automotive, industrial and other markets. FN’s Customer forecasts also extend into fiscal 2027 and beyond.
Fabrinet has begun qualifying Building 10 in Chonburi, with 250,000 square feet already qualified and a similar amount targeted in the first quarter of fiscal 2027. The full 2.0 million-square-foot building remains scheduled for completion in early 2027 and is expected to add $3-$3.5 billion of revenue capacity. The company also converted 120,000 square feet at Pinehurst, commissioned a 200,000-square-foot Nava Nakorn facility, and acquired a Santa Clara campus with about 130,000 square feet of manufacturing space.
Fabrinet expects hyperscaler-direct transceiver programs to begin ramping in the first quarter of fiscal 2027, with one merchant program starting in the December quarter and others in early 2027. The company is also building CPO devices for a handful of customers, though volumes are not yet at scale. With all of these tailwinds, Fabrinet expects revenues of $1.375-$1.425 billion for the first quarter of fiscal 2027.
Fabrinet expects its non-GAAP earnings to be in the range of $4.10-$4.25 per share. The Zacks Consensus Estimate for the same is pegged at $4.19 per share, indicating growth of 43.5% year over year. Estimates have remained unchanged in the past 60 days.
Image Source: Zacks Investment Research
Stock Price Performance and Valuation of SMCI & FN
Shares of SMCI have appreciated 12.6%, while FN has lost 30.8% in the year-to-date period
YTD Performance Chart
Image Source: Zacks Investment Research
FN is trading at a forward 12-month Price to Sales ratio of 1.70X, which is lower than its median of 0.30X, while SMCI is trading at a forward sales multiple of 0.30X, below its median of 0.40X.
Forward 12-Month (P/S) Valuation Chart
Image Source: Zacks Investment Research
Conclusion: SMCI vs. FN
Fabrinet offers a compelling growth opportunity, driven by surging demand for optical connectivity and AI data-center infrastructure. Its data-center revenues grew 68% year over year in fourth-quarter fiscal 2026, while expanding manufacturing capacity supports future customer programs. Hyperscaler-direct transceiver ramps and emerging co-packaged optics provide additional growth avenues. Considering these factors, it would be safer to retain FN stock for now. Both FN and SMCI carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
View the Zacks #1 Rank List
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SMCI vs. FN: Which AI Infrastructure Stock is Safer to Retain?
Key Takeaways
Super Micro Computer (SMCI - Free Report) and Fabrinet (FN - Free Report) are two prominent AI value chain suppliers benefiting from the expansion of AI infrastructure, but they occupy different parts of the supply chain. While Super Micro Computer offers a broad portfolio of rack-scale Total IT Solutions, including complete servers, storage systems, blade servers, subsystems and server management software, Fabrinet provides advanced optical packaging and precision optical, electro-mechanical and electronic manufacturing services to original equipment manufacturers.
With the AI industry growing, both stocks are set to benefit. So the question remains: Which stock has more upside potential? Let’s break down their fundamentals, growth prospects, market challenges and valuation to determine which offers a more compelling investment case.
The Case for SMCI Stock
Super Micro Computer remains positioned to benefit from expanding AI infrastructure demand, supported by rapid adoption of new GPU platforms, its modular Building Block architecture, liquid-cooling expertise and a broader Data Center Building Block Solutions (DCBBS) offering. The company is benefiting from its emphasis on early availability of new AI systems as a competitive advantage. In fourth-quarter fiscal 2026, the company was shipping volume products across NVIDIA’s GB300 NVL72, HGX B300, B200 NVL4 and RTX 6000 Pro lines.
It is also preparing systems based on NVIDIA Vera Rubin and Vera CPU platforms. With AMD, Super Micro Computer launched the Helios product line and MI450 Total Solution while continuing to support MI350 and MI355X systems. Super Micro Computer is adding enterprise and channel customers. Enterprise and channel revenues represented 31% of fiscal 2026 sales and increased 39% year over year. In fourth-quarter fiscal 2026, the category accounted for 50% of revenue compared with 28% in the prior quarter, as customers upgraded compute, storage and networking infrastructure.
The company also increased the number of customers generating more than $1 billion of annual revenue to nine in fiscal 2026 from four in fiscal 2025. SMCI is positioning itself as a one-stop provider for the infrastructure required to build and operate AI factories and modern data centers with its DCBBS that combine rack-scale systems, networking, power, cooling, software and deployment services into an integrated solution. This approach can simplify data center construction and help customers accelerate the deployment of increasingly power- and cooling-intensive AI infrastructure.
The portfolio includes liquid-cooling solutions, such as in-rack coolant distribution units (CDUs), chilled doors and cooling towers. The company says its in-rack CDUs can support cooling capacity of up to 250 kilowatts, while cooling towers can support between 1 and 50 megawatts. Such capabilities are increasingly important as high-performance AI systems generate substantially more heat than conventional computing workloads. DCBBS also includes 400G/800G networking solutions, power shelves capable of providing up to 33 kilowatts per shelf, battery backup systems and generators.
However, Super Micro Computer continues to carry a large inventory position while AI hardware platforms transition quickly. Inventory increased to $12.9 billion as of June 30, 2026 from $11.1 billion at the end of the third quarter and $4.7 billion as of June 30, 2025. Days of inventory rose to 119 days in fourth-quarter fiscal 2026 from 106 days in the prior quarter. SMCI’s profitability continues to vary sharply with customer and product mix. Non-GAAP gross margin rose to 17.6% in fourth-quarter fiscal 2026 from 10.1% in the prior quarter, but management said about 75% of the sequential improvement came from favorable mix, including contracts that shifted into fiscal 2027.
For the first quarter of fiscal 2027, Super Micro Computer expects net sales to be in the range of $14.5-$15.5 billion, with non-GAAP adjusted earnings of $1.01-$1.10 per share. The Zacks Consensus Estimate for SMCI’s first-quarter fiscal 2027 earnings is pegged at $1.24 per share, indicating year-over-year growth of 254.3%. Estimates have been revised upward over the past seven days.
Image Source: Zacks Investment Research
The Case for FN Stock
Traction in advanced optical packaging and precision optical, electro-mechanical and electronic manufacturing services is acting as a tailwind for Fabrinet. Fabrinet’s fourth-quarter fiscal 2026 data center revenues reached $669 million, up 68% year over year and 13% sequentially, and represented 51% of revenue. DCI was the largest contributor to data center growth, with an annualized run rate above $1 billion, while HPC also increased sequentially as next-generation programs ramped.
Fabrinet’s communications infrastructure revenues rose 40% year over year to $413 million. Management expects first-quarter fiscal 2027 revenues of $1.375-$1.425 billion, implying 43% year-over-year growth at the midpoint, with sequential gains expected across data center, communications infrastructure and automotive, industrial and other markets. FN’s Customer forecasts also extend into fiscal 2027 and beyond.
Fabrinet has begun qualifying Building 10 in Chonburi, with 250,000 square feet already qualified and a similar amount targeted in the first quarter of fiscal 2027. The full 2.0 million-square-foot building remains scheduled for completion in early 2027 and is expected to add $3-$3.5 billion of revenue capacity. The company also converted 120,000 square feet at Pinehurst, commissioned a 200,000-square-foot Nava Nakorn facility, and acquired a Santa Clara campus with about 130,000 square feet of manufacturing space.
Fabrinet expects hyperscaler-direct transceiver programs to begin ramping in the first quarter of fiscal 2027, with one merchant program starting in the December quarter and others in early 2027. The company is also building CPO devices for a handful of customers, though volumes are not yet at scale. With all of these tailwinds, Fabrinet expects revenues of $1.375-$1.425 billion for the first quarter of fiscal 2027.
Fabrinet expects its non-GAAP earnings to be in the range of $4.10-$4.25 per share. The Zacks Consensus Estimate for the same is pegged at $4.19 per share, indicating growth of 43.5% year over year. Estimates have remained unchanged in the past 60 days.
Image Source: Zacks Investment Research
Stock Price Performance and Valuation of SMCI & FN
Shares of SMCI have appreciated 12.6%, while FN has lost 30.8% in the year-to-date period
YTD Performance Chart
Image Source: Zacks Investment Research
FN is trading at a forward 12-month Price to Sales ratio of 1.70X, which is lower than its median of 0.30X, while SMCI is trading at a forward sales multiple of 0.30X, below its median of 0.40X.
Forward 12-Month (P/S) Valuation Chart
Image Source: Zacks Investment Research
Conclusion: SMCI vs. FN
Fabrinet offers a compelling growth opportunity, driven by surging demand for optical connectivity and AI data-center infrastructure. Its data-center revenues grew 68% year over year in fourth-quarter fiscal 2026, while expanding manufacturing capacity supports future customer programs. Hyperscaler-direct transceiver ramps and emerging co-packaged optics provide additional growth avenues. Considering these factors, it would be safer to retain FN stock for now. Both FN and SMCI carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here