Super Micro Computer (SMCI) Stock: Targets 70% Growth in Server Sales by 2026

Super Micro Computer (SMCI) Stock: Targets 70% Growth in Server Sales by 2026

TLDR:

• Super Micro Computer (SMCI) stock has risen dramatically, up 13x over three years, now trading around $56 with a projected revenue of $40 billion for FY’26
• After facing significant challenges in 2024 including SEC filing delays and auditor resignation, SMCI is now working with BDO and expects to file its delayed 10-K by February 25, 2025
• The company’s growth is driven by increasing demand for server systems and AI computing, with revenue expected to grow 60% in FY’25 and 70% in FY’26
• SMCI’s margins have improved from 6% in FY’22 to 9% in FY’24, with potential to reach 13.5% by FY’27
• The stock has surged 83.5% year-to-date in 2025, outperforming the Computer-Storage Devices industry’s 17.3% gain

Super Micro Computer (SMCI) has emerged from a challenging 2024 with renewed momentum, as the server solutions provider’s stock soars 83.5% year-to-date in 2025.

The company, currently trading around $56 per share, has seen its value multiply 13 times since February 2022.

The company faced several hurdles in 2024, including delays in filing its annual 10-K report with the SEC and the resignation of its public auditor, Ernst & Young.

These challenges, combined with accusations of accounting irregularities from short-seller Hindenburg Research, led to a substantial 80% stock drop during that period.

However, SMCI has taken steps to address these concerns. The company has partnered with accounting firm BDO and expects to file its delayed 10-K report by February 25, 2025. A special board committee, supported by legal and forensic accounting experts, conducted an internal review that found no evidence of fraud or misconduct.

Looking ahead, SMCI’s CEO Charles Liang has projected ambitious revenue growth. The company expects to reach $24 billion in revenue for FY’25, representing a 60% increase. For FY’26, projections suggest even stronger growth of 70%, pushing revenue to approximately $40 billion.

The growth trajectory continues beyond 2026, with estimates indicating potential revenue of $54 billion by FY’27, marking a 3.6x expansion over three years. This growth is primarily driven by increasing demand for data center solutions and AI computing infrastructure.

SMCI’s competitive edge in the server market stems from its customizable and energy-efficient solutions. The company anticipates that 30% of its shipments next year will incorporate liquid-cooling systems, addressing the growing heat management challenges in data centers.

The company’s partnership with NVIDIA Corporation through the Blackwell platform has enhanced its AI computing capabilities while reducing operational expenses. This collaboration has strengthened SMCI’s market position in the rapidly growing AI infrastructure sector.

Financial Metrics

Financial metrics show improving profitability, with adjusted net margins rising from 6% in FY’22 to 9% in FY’24. Analysts project these margins could expand to 13.5% by FY’27, driven by economies of scale and a shift toward higher-end products.

The stock currently trades at approximately 25x estimated trailing earnings and 15x projected FY’26 earnings. This represents a relatively conservative valuation compared to the industry average, with SMCI trading at 20.3x forward earnings versus the industry’s 22.05x multiple.

SMCI’s return on equity stands at 34%, surpassing the industry average of 23%, indicating strong profitability and efficient capital management.

The company’s historical performance shows consistent gains over the past four years, with returns of 39% in 2021, 87% in 2022, 246% in 2023, and 7% in 2024.

Current market indicators suggest continued momentum, with the stock trading above its 50-day moving average. The demand for SMCI’s products is expected to increase as AI models become increasingly multimodal, processing various types of content including text, speech, images, video, and 3D content.

The company’s focus on energy-efficient technologies positions it favorably as global environmental regulations become stricter. This strategic approach to sustainability adds another layer to SMCI’s competitive advantages.

SMCI plans to submit its delayed 10-K report to the SEC by February 25, 2025.

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