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San Jose, California-based Super Micro Computer, Inc. (SMCI) develops and manufactures advanced server and storage solutions built on a modular and open architecture. Valued at $24.8 billion by market cap, the company offers servers, storage systems, motherboards, full racks, chassis, and accessories worldwide.
Companies worth $10 billion or more are generally described as “large-cap stocks,” and SMCI definitely fits that description, with its market cap exceeding this threshold, reflecting its substantial size, influence, and dominance in the computer hardware industry. SMCI excels in delivering customized modular solutions thanks to its innovative and open-standard architecture. Its adaptable product portfolio spans servers, storage, networking devices, and software, giving the company a competitive edge and strong market positioning.
Despite its notable strength, SMCI slipped 57.5% from its 52-week high of $101.40, achieved on Jun. 20, 2024. Over the past three months, SMCI stock gained 12.8%, outperforming the Nasdaq Composite’s ($NASX) 7.7% gains during the same time frame.
In the longer term, shares of SMCI rose 41.5% on a YTD basis, considerably outperforming NASX’s 1.5% gains. However, the stock dipped 43.9% over the past 52 weeks, significantly underperforming NASX’s 14.4% returns over the same time frame.
To confirm the recent bullish trend, SMCI is trading above its 50-day and 200-day moving averages since mid-May.
SMCI has been underperforming due to tariffs and delayed customer-platform decisions. The company is experiencing challenges such as customers evaluating next-generation AI platforms and facing margin contraction from price competition. SMCI also had a one-time inventory write-down on older-generation components. Competition from Hewlett Packard Enterprise Company (HPE) and Dell Technologies Inc. (DELL) in the infrastructure as a service space adds further pressure on SMCI.
On May 6, SMCI shares closed up more than 2% after reporting its Q3 results. Its adjusted EPS declined 53% year over year to $0.31. The company’s revenue stood at $4.6 billion, up 19.5% year over year. SMCI expects full-year revenue in the range of $21.8 billion to $22.6 billion.
In the competitive arena of computer hardware, Dell Technologies Inc. (DELL) has taken the lead over SMCI, showing resilience with a 12.1% downtick over the past 52 weeks but lagged behind the stock with a marginal loss on a YTD basis.
Wall Street analysts are moderately bullish on SMCI’s prospects. The stock has a consensus “Moderate Buy” rating from the 15 analysts covering it, and the mean price target of $45.13 suggests a potential upside of 4.7% from current price levels.
