Super Micro: Avoid FOMO, As Best Days Are Well Over (Rating Downgrade)

(8min)

Summary

  • SMCI has staged a remarkable recovery from 2024 lows, but recent outperformance may be overstated.
  • AI infrastructure expansion outside the US offers opportunity, but logistical, regulatory, and geopolitical hurdles could delay meaningful revenue growth.
  • SMCI's prospects remain tied to Nvidia and big tech CapEx, with further upside limited unless fundamentals improve or CapEx guidance surprises positively.
  • SMCI's mean reversion opportunity has already played out, and its valuation has also surpassed its long-term average.
  • I argue why it's timely to temper the optimism and enthusiasm on SMCI and avoid joining the FOMO crowd once more.
  • Looking for a helping hand in the market? Members of Ultimate Growth Investing get exclusive ideas and guidance to navigate any climate. Learn More »

Supermicro headquarters in San Jose, California, USA

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Super Micro: Solid Recovery, What's Next?

A pretty good month for investors of Super Micro Computer, Inc. (NASDAQ:SMCI), as they attempted to squeeze out the intransigent SMCI short sellers, even as the leading AI rack-scale hardware

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JR Research is an opportunistic investor. He was recognized by TipRanks as a Top Analyst. He was also recognized by Seeking Alpha as a "Top Analyst To Follow" for Technology, Software, and Internet, as well as for Growth and GARP.

He identifies attractive risk/reward opportunities supported by robust price action to potentially generate alpha well above the S&P 500. He has also demonstrated outperformance with his picks.

He focuses on identifying growth investing opportunities that present the most attractive risk/reward upside potential. His approach combines sharp price action analysis with fundamentals investing.

He tends to avoid overhyped and overvalued stocks while capitalizing on battered stocks with significant upside recovery possibilities.

He runs the investing group Ultimate Growth Investing which specializes in identifying high-potential opportunities across various sectors. He focuses on ideas that has strong growth potential and well-beaten contrarian plays, with an 18 to 24 month outlook for the thesis to play out.

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Analyst’s Disclosure:I/we have a beneficial long position in the shares of IGV, SMH 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.

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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