Super Micro: Big Opportunity Or Falling Knife? (Upgrade)

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Summary

  • Super Micro's stock dropped 12% after reporting preliminary Q2 sales of $4.5-4.6 billion, below the $5-6 billion target, yet sales grew 18% YoY.
  • Despite a profit downgrade and margin pressure, Super Micro remains profitable and is valued attractively at a 9.1x profit multiple, similar to Dell and HP Enterprise.
  • The server and storage market is projected to grow significantly, driven by AI deployment, providing long-term tailwinds for Super Micro's sales and profitability.
  • Investors are overly emotional; Super Micro's valuation embeds a high margin of safety, making it a compelling buy with potential for a stock re-rating.

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The stock price of Super Micro Computer Inc. (NASDAQ:SMCI) plummeted 12% on Wednesday after the IT solutions provider reported dismal preliminary results for its second financial quarter.

The IT company, which has a main focus on

This article was written by

14.29K Followers
A financial researcher and avid investor with a keen eye for innovation and disruption, as well as growth buy-outs and value stocks. Keeping an eye on the pace of high tech and early growth companies, I write about current events and the biggest news surrounding the industry, and strive to provide readers with ample research and investment opportunities.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of SMCI either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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