Super Micro Computer [SMCI] is a company that provides ready-to-use server and liquid cooling solutions to data centers, cloud computing service providers and telecommunication companies.
The company aims to be the world’s leading rack-scale solutions provider. For context, rack-scale solutions help data centers combine individual servers to function as a high-performance unit.
This stock spotlight will discuss the latest developments, earnings, market performance, and bull and bear cases for SMCI stock.
Key Developments: Super Micro’s AI Focus
The artificial intelligence (AI) boom has created an unprecedented demand for computing resources. In response, Super Micro has aggressively expanded its footprint by launching AI-focused hardware, entering strategic partnerships and ramping up production capacity in recent years.
In 2024, Super Micro launched several AI-focused products, including a full-stack data storage solution built specifically for AI and machine learning workloads, liquid-cooled graphic processing unit (GPU) cluster solutions for large language models, and ready-to-deploy AI data centers.
By the end of the year, Super Micro had bagged deals to build an AI data center in Japan and to collaborate with Fujitsu [FJTSY] to develop liquid-cooled systems for next-generation green data centers.
The biggest deal of all was the one signed with Elon Musk-owned xAI, whereby Super Micro helped the company build an AI supercomputer with 100,000 Nvidia [NVDA] H100 GPUs in 122 days.
In 2025, the San Jose-based firm announced plans to increase its US manufacturing capacity by building its third campus in the country as it looks to align with the “Made in America” movement promoted by US President Donald Trump.
In May, Super Micro signed a memorandum of understanding with DataVolt to build AI data centers in Saudi Arabia in a deal worth at least $20bn.
Risks and Rebound
The SCMI stock price has fallen by 45.29% over the past year due to concerns related to the company’s accounting practices.
It was not until February 2025, when the company filed its annual earnings report for the year ending June 2024 along with subsequent quarterly results, that SMCI stock began to regain investor interest.
As of the July 11 close, SCMI stock is up 61.55% year-to-date.
Key Fundamentals and Financial Health: Slow Q3, Strong Outlook
In Q3 2025, Super Micro reported a 19.48% year-over-year increase in net sales to $4.60bn. However, the reported figure came in lower than the company forecast.
Super Micro CEO Charles Liang said the net sales miss was due to “delayed commitments” from clients who were evaluating between current and upcoming GPU offerings.
70% of Q3 net sales came from AI GPU customers. By geography, the US represented 60% of quarterly net sales, Asia accounted for 30% and Europe brought in 6%.
Quarterly net income came in at $109m, down 72.89% from $402m reported in the same period a year ago.
Gross margin came in at 9.6% for the quarter, compared to 15.5% a year ago.
Super Micro lowered its full-year revenue forecast from a range of $23.5bn–25.0bn to a new range of $21.8bn–22.6bn.
The company reported net sales worth $14.99bn for the full year ended June 2024.
AI Infrastructure Segment: ALAB vs CRDO vs SMCI
Astera Labs [ALAB] is a provider of semiconductor-based connectivity solutions. The company focuses on connecting individual GPU servers to function as a single unit. Astera Labs is not a full-stack server solutions company like Super Micro.
Credo Technology [CRDO] provides high-speed connectivity solutions for AI infrastructure. Credo focuses on the connectivity layers between hardware components, not the servers themselves.
| ALAB | CRDO | SMCI |
Market Cap | $15.82bn | $16.91bn | $29.39bn |
P/E Ratio | 73.21 | 339.72 | 26.76 |
Estimated Sales Growth (Current Fiscal Year) | 77.26% | 84.03% | 47.90% |
Estimated Sales Growth (Next Fiscal Year) | 28.40% | 22.58% | 34.24% |
Source: Yahoo Finance
SMCI Stock: The Investment Case
The Bull Case for Super Micro: Increasing Data Center Spend
Demand for computational resources is expected to grow exponentially as new, powerful AI models are developed. According to a research report by Deloitte, AI data centers are projected to require $5.2trn in capital expenditure by 2030 to keep pace with the demand for compute power.
Super Micro is poised to benefit from this spending by positioning itself as a one-stop shop for AI data centers. While most of its peers focus on catering to a part of the stack, Super Micro delivers a package that combines servers, racks, connectivity, power and cooling into one ready-to-use solution.
At the heart of Super Micro’s competitive advantage is its new Data Center Building Block Solutions (DCBBS), which is a modular, plug-and-play solutions bundle that the company claims can slash deployment timelines from quarters to weeks and reduce ownership cost by up to 30%. Complementing DCBBS is Super Micro’s next-gen DLC-2 (Direct Liquid Cooling) technology, which is expected to cut energy costs by 25%.
The Bear Case for Super Micro: Accounting Issues
Concerns surrounding Super Micro’s accounting practices have cast a shadow over an otherwise strong growth outlook for the company.
In August 2018, Super Micro was temporarily delisted from the Nasdaq for failing to file financial statements. In August 2020, Super Micro was charged by the US Securities and Exchange Commission for “prematurely recognizing revenue and understating expenses over a period of at least three years”.
In August 2024, investment research firm Hindenburg Research alleged that the company had rehired top executives directly involved in the accounting scandal. In October 2024, Super Micro announced Ernst & Young had resigned as the firm’s auditor, which sent the stock price tumbling by 32.68% in a single session.
“We are resigning due to information that has recently come to our attention that has led us to no longer be able to rely on management’s and the Audit Committee’s representations and to be unwilling to be associated with the financial statements prepared by management,” Ernst & Young stated, according to Super Micro’s announcement.
Conclusion
Super Micro Computer stands to benefit significantly as demand for computational power grows. But can investors ignore the company’s accounting-related concerns and questionable management practices?
Disclaimer Past performance is not a reliable indicator of future results.
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