Judgement day for Super Micro Computer (NASDAQ:SMCI) has come and gone, and investors can breathe a sigh of relief (at least for now).
Indeed, SMCI succeeded in meeting its February 25 filing deadline to remain listed on the Nasdaq stock exchange, removing a major storm cloud that had been hanging over its head for the past half year. Shares jumped up by double digits the following day, signifying the market’s satisfaction with the news.
Still, not all is sunshine and rainbows for the AI server maker. BDO, the company’s new auditor, released a statement that it has an “adverse opinion” regarding some of SMCI’s internal controls. SMCI admitted as such, writing in its Form 10-K filing that it had identified “certain material weaknesses” in its internal processes.
In the same breath, however, the company also stated its commitment to addressing these shortcomings, laying out a series of steps it plans on taking to fix these issues.
While acknowledging that “blemishes” remain, top investor Michael Wiggins De Oliveira is ready to turn his attention towards the future.
“Investors should focus on Super Micro’s growth potential rather than past financial issues, as future performance could make current SMCI valuations look like a bargain,” asserts the 5-star investor, who sits in the top 4% of TipRanks’ stock pros.
Wiggins De Oliveira cites SMCI’s projected revenues of $40 billion for Fiscal Year 2026, which the investor notes is starting just around the corner in July. Though not the only company working in this space, SMCI’s “unique liquid-cooling technology and AI server customization position it well in the competitive AI computing sector.”
Wiggins De Oliveira drives home the point that SMCI confirmed its revenue targets in the white-hot AI computing space. In other words, an inflection point has arrived, and the time has come to look forwards.
The investor calculates that SMCI is valued at 22x next year’s free cash flow, an attractive price for a company operating in this lucrative market.
“If the company delivers on its growth ambitions, today’s valuation could look like a bargain. That’s the big picture investors should keep in mind,” concludes Wiggins De Oliveira, who is rating SMCI a Buy. (To watch Wiggins De Oliveira’s track record, click here)
Wall Street is not sold, however. With 3 Buy, 2 Hold, and 2 Sell ratings, SMCI holds a consensus Hold (i.e. Neutral) rating. Its 12-month average price target of $42.83 would translate into losses of ~16%. (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.