TLDR
- Super Micro avoided delisting after meeting its February 25 filing deadline
- Stock has dropped in high single-digits despite compliance, showing market hesitation
- The company has a P/E multiple of 20.78, below sector median of 24.20
- Super Micro is expanding with a new California campus for liquid-cooling technology
- CEO Charles Liang expects 30% of new data centers to adopt liquid cooling solutions
Super Micro Computer (SMCI) has successfully navigated its recent accounting troubles, meeting the February 25 filing deadline that had threatened the company with potential delisting from the NASDAQ.
Despite this positive development, the server maker’s stock has dropped in the high single-digits in the days following the announcement. This decline reflects lingering investor concerns about the company’s admitted weak internal controls.
Super Micro committed to addressing these control issues in its Form 10-K filing. The drop in share price may also reflect broader market worries about instability, geopolitical tensions, and potential disruptions in AI spending from competitors like DeepSeek.
Five-star investor Friso Alenus views the price drop as creating an “attractive investment” opportunity. He believes the company is currently undervalued despite its strong position in the growing AI infrastructure market.
Alenus points to Super Micro’s relatively low Price-to-Earnings multiple of 20.78, which sits below the sector median of 24.20 and near its historical average of 19.5x. This valuation seems at odds with the company’s growth trajectory.
Growth Strategy
Super Micro has offered ambitious guidance for the coming years. The company projects revenue of $23.5 to $25 billion for FY2025 and $40 billion for FY2026, indicating confidence in continued strong demand for its server products.
One key factor in Super Micro’s growth strategy is its direct-liquid cooling technology. This innovation offers energy efficiency, cost savings, and improved performance for data centers, potentially justifying a higher valuation multiple according to Alenus.
To meet growing demand, Super Micro announced plans to build a third campus in California’s Silicon Valley. This expansion will accelerate the production of liquid-cooled services for data centers.
The new development will cover 3 million square feet and is expected to create hundreds of new jobs. Construction is set to begin later this year with support from San Jose Mayor Matt Mahan.
CEO Charles Liang stated, “We anticipate that up to 30% of new data centers will adopt liquid cooling solutions. Today, Supermicro can deliver 5,000 air-cooled or 2,000 liquid-cooled racks per month to support substantial orders.”
Despite Alenus’s bullish stance, Wall Street analysts remain cautious. Super Micro currently holds a consensus Hold rating, with 3 Buy, 4 Hold, and 2 Sell ratings from analysts.
The 12-month average price target sits at $45.75, suggesting potential gains of around 10% in the year ahead. This mixed outlook reflects the uncertainty still surrounding the company.
Mizuho Securities analyst Vijay Rakesh recently reinstated coverage with a Neutral rating and a $50 price target. Rakesh acknowledged that Super Micro “has seen limited impact from compliance issues” and maintains “a good product portfolio and strong overall AI server market growth.”
However, Rakesh also noted increasing competition from rivals like Dell Technologies. He estimated Super Micro’s share of the global AI server market will be around 23% this year, down slightly from its 25% share in 2024.
Super Micro’s stock gained 1.8% in premarket trading on Monday, reaching $42.20, after falling 3.5% on Friday. The stock has declined 20% over the past five trading sessions, showing continued volatility.
With its accounting issues addressed and expansion plans in place, Super Micro now faces the challenge of executing on its growth strategy while rebuilding investor confidence and fending off competitors in the rapidly evolving AI server market.
Oliver Dale
Editor-in-Chief of CoinCentral and founder of Kooc Media, A UK-Based Online Media Company. Believer in Open-Source Software, Blockchain Technology & a Free and Fair Internet for all. His writing has been quoted by Nasdaq, Dow Jones, Investopedia, The New Yorker, Forbes, Techcrunch & More. Contact Oliver@coincentral.com
