Super Micro Computer (NASDAQ:SMCI) stock is on fire this month, skyrocketing a whopping 113%.
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The rally follows recent developments that have addressed major investor concerns. In August 2024, Supermicro faced allegations of accounting manipulation, leading to an internal review. The company has since appointed a new auditor and is working diligently to complete its overdue SEC filings. Importantly, Supermicro has expressed confidence in meeting the February 25 deadline to file its annual report for fiscal 2024, thereby avoiding potential delisting from Nasdaq.
Adding to investor optimism, Supermicro’s preliminary Q2 FY 2025 results reflected both strong revenue growth and healthy projections for the coming two years. The company reported revenues of $5.6–$5.7 billion, marking a 54% year-over-year increase. Looking ahead, its FY 2025 revenue forecast of $23.5–$25 billion signals a robust 57% to 67% growth. And the momentum doesn’t stop there—FY 2026 projections indicate an even steeper climb, with revenues expected to hit $40 billion, representing 60% to 70% growth.
Much of this expansion is driven by the soaring demand for Supermicro’s AI servers, which are built to support Nvidia’s Blackwell GPUs.
Building on this momentum, one top investor, known by the pseudonym the Asian Investor, believes this rally still has plenty of fuel left in the tank.
“Super Micro Computer’s strong fundamentals suggest potential for a continued upside revaluation, provided the company avoids further issues and executes well in the server market,” declares the 5-star investor, who sits in the top 2% of TipRanks’ stock pros.
Asian Investor expects SMCI to be supported by the wave of spending that is boosting AI hardware companies. Unlike some other companies, however, the investor notes that SMCI is trading at a much lower valuation.
“Super Micro Computer is valued at a forward price-to-earnings ratio of 11.3X, which makes it one of the cheapest hardware companies with AI exposure that investors can get their hands on right now,” adds Asian Investor.
At present, the investor argues that the seemingly biggest risk facing the company is its damaged reputation. This issue, according to Asian Investor, seems well on its way to being resolved.
Bottom line? If SMCI stays on track and continues executing in the high-growth AI server market, the investor sees room for further upside – and is confident enough to upgrade the stock to a Strong Buy rating. (To watch The Asian Investor’s track record, click here)
Wall Street is not fully onboard, 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 $36.50 implies a ~39% downside from current levels. (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.
