The long-awaited February 25 filing deadline for Super Micro Computer (NASDAQ:SMCI) is in the rearview mirror, and the company has received a passing grade.
Though the delisting fears have come and gone, there seem to be some residual jitters throughout the market. In fact, the share price has actually dropped in the high single-digits in the days that followed.
Some of these concerns are no doubt related to the company’s admissions of weak internal controls, something that SMCI committed to addressing in its Form 10-K. Beyond any compliance issues, overall fears of market instability, geopolitical turmoil, and potential DeepSeek disruptions in AI spending also conspired to push share prices down.
What does this mean for SMCI going forward?
Investor Friso Alenus believes that it is time to look towards the future, as the drop in share prices are making SMCI an “attractive investment” with plenty of upside.
“Despite past accounting issues, Super Micro is undervalued with a low P/E multiple, presenting an attractive investment opportunity amid strong AI-driven sales growth,” notes the 5-star investor.
Among the reasons to be bullish, Alenus cites the huge AI capex investments that are coming down the pike, pointing to the major outlays in AI spending that the hyperscalers have planned for the coming year. The investor mentions SMCI’s FY2025 and FY2026 guidance of $23.5 to $25 billion and $40 billion, respectively, as further evidence that there will be plenty of revenues up ahead.
And yet, SMCI has a relatively depressed valuation, notes Alenus. The investor explains that SMCI’s Price-to-Earnings multiple of 20.78 is not far from its historical average of 19.5x. It is also under the sector median of 24.20. All this is happening despite SMCI’s improving competitive advantages, reminds the investor.
“Direct-liquid cooling offers energy efficiency, cost savings and improved performance. This alone should demand a higher multiple,” Alenus states.
With sales numbers expected to be on the up-and-up – and share prices down – Alenus thinks this undervalued company is one to gobble up.
“The latest accounting debacle created a unique value proposition to build a position in one of the fastest-growing companies,” concludes Alenus, who is rating SMCI a Buy. (To watch Alenus’ track record, click here)
Wall Street analysts are not as convinced, however. With 3 Buy, 4 Hold, and 2 Sell ratings, SMCI holds a consensus Hold (i.e. Neutral) rating. Its 12-month average price target of $45.75 would translate into gains of ~10% in the year ahead. (See SMCI stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.