Don't Miss Super Micro's Next Big Rally

(9min)

Summary

  • I maintain my 'Buy' rating on SMCI, expecting its comeback to continue as EPS growth rates recover in the coming years.
  • Recent Q3 results showed strong revenue growth and EPS beat, despite a temporary margin dip due to customers pausing for new AI platforms.
  • The pause in demand is linked to the industry transition from Nvidia Hopper to Blackwell GPUs, not underlying demand weakness.
  • Innovations like DCBBS and DLC-2, alongside strong Blackwell orders, will drive future growth and help diversify SMCI's customer base beyond current key clients.
  • Even with conservative FY2026 EBITDA estimates (10% below consensus) and current valuation multiples, SMCI appears significantly undervalued by approximately 35%. So I keep my "Buy" unchanged for now.

Round arrow 3d symbol. Backup, renew, software update concept.

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Intro & Thesis

If you read my articles for some time, you should remember that I called Super Micro Computer, Inc. (NASDAQ:SMCI) a "Strong Buy" back in December 2022 when it was

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This article was written by

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Daniel Sereda is chief investment analyst at a family office whose investments span continents and diverse asset classes. This requires him to navigate through a plethora of information on a daily basis. His expertise is in filtering this wealth of data to extract the most critical ideas. He runs the investing group Beyond the Wall Investing in which he provides access to the same information that institutional market participants prioritize in their analysis. Learn more.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase of call options or similar derivatives in SMCI over the next 72 hours. 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.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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