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Valued at a market cap of $19 billion, Super Micro Computer (SMCI) develops high-performance server and storage solutions with modular, open architecture for enterprise data centers, cloud computing, artificial intelligence, 5G, and edge computing markets. It offers complete servers, storage systems, networking devices, and management software, selling through direct sales, distributors, resellers, and OEMs globally.
In the last 10 years, SMCI stock has returned more than 850% to shareholders. Despite these outsized gains, the tech stock is down 73% from all-time highs, allowing you to buy the dip.
Earlier this week, investment bank Needham resumed coverage of Super Micro Computer with a Buy rating and $39 price target, citing completed financial filings and management improvements despite recent performance challenges. The analyst said the valuation was “extremely attractive” at current levels.
How Did Super Micro Computer Perform in Fiscal Q3?
Super Micro Computer’s fiscal Q3 results (ended March) matched its preliminary figures but fell short of initial analyst expectations. The server maker also issued fiscal Q4 guidance below Wall Street forecasts.
In Q3, SMCI reported revenue of $4.6 billion, an increase of 19% year over year but down 19% compared to the December quarter. Its adjusted earnings per share stood at $0.31, below the $0.66 reported in the same quarter last year and the $0.50 analysts had originally expected before the company’s preliminary announcement.
CEO Charles Liang attributed the quarterly performance shortfall to customer hesitation during the transition between Nvidia’s (NVDA) current Hopper GPU platform and the upcoming Blackwell architecture. This technological transition caused customers to delay commitments as they evaluate options, with many deals now expected to materialize in the June and September quarters instead.
For the fiscal fourth quarter, Super Micro guided for revenue between $5.6 billion and $6.4 billion with adjusted EPS of $0.40 to $0.50, below consensus estimates of $6.82 billion and $0.69, respectively. The hardware giant cited macroeconomic uncertainties and tariff concerns following President Donald Trump’s recent announcement of sweeping new import tariffs as reasons for its conservative outlook.
Despite these challenges, Super Micro highlighted several technological advancements that are driving future growth. Super Micro stated that its upcoming Data Center Building Block Solutions (DCBBS), which features second-generation liquid cooling technology (DLC-2), offers it a competitive advantage. This solution promises to reduce power consumption, optimize space, decrease water usage, and potentially deliver up to 30% lower total cost of ownership while accelerating data center deployments.
SMCI continues expanding its global manufacturing footprint with new facilities in Malaysia and scaling operations in Taiwan, Europe, and the U.S. to provide customers with flexible logistics options amid tariff uncertainties.
What Is the Target Price for SMCI Stock?
Super Micro has faced significant challenges over the past year, including a short-seller report alleging accounting manipulation and the resignation of its auditor, EY. Analysts tracking the tech stock expect its sales to rise from $14.94 billion in fiscal 2024 to $38.5 billion in fiscal 2027. Comparatively, adjusted earnings per share are forecast to expand from $2.21 per share in 2024 to $4.01 per share in 2027.
SMCI stock currently trades at a forward price-earnings multiple of 12.3x, below its 10-year average of 13x. If the tech stock is priced at 12x forward earnings, it will trade around $50 in early 2027, indicating an upside potential of 50% from current levels.
Out of the 15 analysts covering SMCI stock, four recommend “Strong Buy,” two recommend “Moderate Buy,” seven recommend “Hold,” and two recommend “Strong Sell.” The average target price of SMCI stock is $45, 41% above the current trading price.
