SMCI: Attractive Valuation After Overreaction in AI Data Center Demand
"Number four is Super Micro computer SMCI. Super Micro computer builds the powerful servers and hardware that run AI and cloud systems. Instead of just using fans and air, SMCI designed systems where liquid flows through special pipes to pull heat away from powerful chips like Nvidia's H100s, allowing data centers to run faster and use less energy. Despite a recent dip following earnings that weren't bad at all, the order book remains very strong with a backlog jump to $13 billion and a raised full-year revenue outlook to $36 billion. This overreaction makes SMCI a great deal poised to benefit from explosive AI server demand."
The host emphasizes SMCI's innovative liquid cooling technology and strong backlog fueled by Nvidia AI chip orders. Despite a brief dip due to earnings timing, the elevated guidance and order book signal a robust long-term play in the expanding AI data center market.
Super Micro Earnings Guidance and Margin Headwinds
"Super Micro here, a breakout quarter for them. We saw the stock was down roughly 11%. Bullish sense, they have a really strong guidance for quarter 2, 10 to 11 billion. Massive, massive growth thanks to the GB300 driven by a last minute GB300 upgrade. For the full year, they're expecting about $36 billion and securing about a 13 billion backlog on GB300 products. The big critical headwinds in my opinion are that margins plunged like crazy, with a 6.5% decline of 300 basis points—the lowest level in recent company history."
The commentary outlines Super Micro's strong earnings guidance amid significant headwinds from margin compression due to larger, lower-margin sales, leaving investors divided on its near-term outlook.
SMCI Revenue Miss and Margin Concerns
"Exactly. Another AI related company and this one makes servers uh ticker SMCI. That stock is down nearly 9% in the pre-market. The company reported first quarter revenue of $5 billion. That was well below the 6 to7 billion the company had expected to make. A third of the revenue came from GPU related AI servers, but sales fell 15% from the year prior as some shipments were delayed. The company did raise revenue guidance for its current fiscal year by nearly 10%. That might come with smaller margins as it provides more services for some of its AI mega deals. The outlook for earnings and margins is still murky and the CEO noted on the call that competition in the space remains intense."
SMCI is struggling after reporting a significant revenue miss and a notable pre-market drop of nearly 9%. Although the company raised its annual revenue guidance, weaker margins and intense competition add uncertainty to its outlook.
SMCI: Undervalued Opportunity in the AI Arms Race
"So, one stock that I believe is screaming buy right now is SMCI, Super Micro Computer. SMCI got priced for perfection early in the AI hype, then crashed as investors panicked amid short seller fear campaigns. But now, the fundamentals are very strong, with rapidly growing demand and reasonable valuation compared to peers. Some estimates show 40 to 50% upside if rerated like other AI names. With high short interest and improving margins as it shifts to high-end liquid cooled AI systems, SMCI stands as a classic undervalued setup in the AI arms race."
The speaker makes a strong trade call on SMCI, emphasizing its undervalued status in the AI infrastructure space, backed by solid fundamentals, margin improvement prospects, and potential for a significant upside once the fear subsides.
Super Micro Earnings Guidance Raises Caution Amid Potential Upside
"Now, I want to jump into Super Micro. So, Super Micro right now is down roughly 8.7% for the day. Unfortunately, today Super Micro provides first quarter of fiscal year 2026 update. The revenue that they expect for this quarter is going to be $5 billion versus the 6 to 7 billion guidance. They mentioned they're seeing robust demand on the GB300, the B300, and even AMD's 355X liquid cooling, which is already shipping right now. To calm nerves, they do mention that they continue to see customer demand accelerating and they are reiterating revenue of at least $33 billion for fiscal year 2026."
The speaker highlights Super Micro's disappointing first quarter update with revenue expectations falling short of guidance, while noting strong demand for new products and significant design wins that could drive a rebound in the next quarter. There is underlying caution concerning potential margin pressure if older models are discounted.
Negative Guidance and Accounting Concerns at SMCI
"Looking at shares of Super Micro Computer, that's taker SMCI. We're really seeing what was once a fan favorite here, reporting uh an unexpectedly issuing a first quarter guidance that fell short of the streets estimates here. Of course, you know, the stock is still up about 61% year to date. But this is among the worst performing stocks in the S&P 500 right now, down as much as 7.6% here as people really just parse this unexpected uh delivery here. And also, we do know that the company's really been working to recover from some of its accounting concerns since it missed an August 2024 deadline to file its annual financial report here."
The commentary notes that SMCI has reported disappointing Q1 guidance and is facing accounting issues, including a missed filing deadline, despite strong year-to-date gains. This mixed performance and recent negative news highlights considerable short-term risk.