With Regulatory Uncertainty in the Rear-View Mirror, Is Super Micro Stock a Buy?

Super Micro Computer (SMCI) has navigated a period of regulatory uncertainty that eroded significant value from its share price. The company is fully compliant with the Nasdaq’s listing rules and has caught up on all previously delayed filings, meeting its reporting obligations under the Securities Exchange Act.

With regulatory uncertainty in the rear-view mirror, is Super Micro stock a buy right now? Let’s take a closer look.

AI Demand to Drive Super Micro’s Growth

Super Micro is poised to capitalize on the booming demand for artificial intelligence (AI) infrastructure, particularly in high-performance computing (HPC) and GPU-powered server solutions. The company is seeing strong sales momentum with AI-driven demand surging, especially among large enterprises and data centers. Further, the solid demand is resulting in higher average selling prices, which will likely cushion its margins and bottom line.

Looking ahead to fiscal year 2025 and beyond, Super Micro’s growth prospects remain strong. The company’s direct-liquid cooling (DLC) technology is witnessing higher adoption from new data centers, and this trend is likely to sustain. The growing adoption of DLC technology and AI infrastructure projects based on Nvidia’s (NVDA) Blackwell architecture positions Super Micro for solid growth and expansion.

Thanks to these tailwinds, Super Micro is projecting fiscal 2025 revenue in the range of $23.5 billion to $25 billion, reflecting a year-over-year increase of 57% to 67%. Moreover, the company is on track to reach $40 billion in revenue by fiscal 2026.

Super Micro Is a Leader in Next-Generation AI Infrastructure

Super Micro is a leader in providing next-generation AI infrastructure solutions, and the demand for its latest platforms is expected to accelerate. The company has already begun shipping Nvidia Blackwell products, including air-cooled 10U and liquid-cooled 4U NVIDIA B200 HGX systems. Additionally, its NVIDIA GB200 NVL72 racks are fully ready for deployment. Super Micro is also developing new platforms that are environmentally friendly and offer higher density and improved efficiency.

The company’s management noted that fulfilling existing AI solution backlogs remains a challenge, as some customers require additional time to complete DLC data center buildouts. Nevertheless, demand remains strong from large customers and enterprises,

Super Micro’s Competitive Edge

Super Micro has emerged as a leader in driving the adoption of DLC technology, which significantly reduces operational costs and enables green computing. Its early and substantial investments in this technology provide a sustainable competitive advantage and economies of scale that set it apart from competitors.

Further, Super Micro’s Datacenter Building Block Solutions offer an end-to-end infrastructure package, integrating servers, racks, networks, storage, cooling systems, software management, and on-site deployment. This approach streamlines operations and reduces power consumption, space requirements, and water usage, ultimately lowering the total cost of ownership (TCO). By accelerating data center deployments, Super Micro is reshaping the industry’s approach to AI-driven infrastructure and is poised to benefit from growing investment in this sector.

Is Super Micro Stock a Buy?

Wall Street analysts currently rate the stock as a “Hold.” However, Super Micro’s strong next-generation product lineup, increasing adoption of DLC technology in data centers, focus on efficiency, and expanding U.S. and global manufacturing footprint position it well for long-term growth.

The company’s early lead in AI infrastructure, powered by Nvidia’s Blackwell chips, and solid product quality, software, and security give it a competitive edge and strengthen its position as a leading data center infrastructure solutions provider.

Super Micro continues to enhance its Datacenter Building Block Solutions by integrating key subsystems, strengthening its role as a one-stop shop for data centers. With the growing demand for AI-driven solutions, the company is well-positioned to benefit from the industry boom and achieve strong growth.

Additionally, the recent dip in its share price has made its valuation more attractive. SMCI trades at a forward price-earnings multiple of 17.94x and a price-sales ratio of 1.55x, presenting a compelling opportunity.

Given its strong growth potential and appealing valuation, Super Micro is a solid buy at current levels.