Super Micro Computer stock (NASDAQ:SMCI) surged nearly 10% in last week’s trading and is up approximately 58% year-to-date. What is behind the recent gains? Although there have not been many stock-specific catalysts lately, the broader markets have experienced gains following reports of potential renewed discussions with Iran, which indicates a possible easing following recent airstrikes. This geopolitical alleviation may facilitate smoother global supply chains, which are vital for booming sectors like AI and data center infrastructure, both currently witnessing robust demand and ongoing investment.
Super Micro has recently revealed intentions to issue $2 billion in convertible notes that will mature in 2030. While this could potentially dilute existing shareholders, the issuance is expected to enhance the company’s liquidity as it accelerates capacity expansion to satisfy increasing demand.
Other long-term trends are also influencing the stock. Super Micro’s server products have consistently been closely connected to Nvidia’s GPU ecosystem and roadmap. The company has generally been quicker than its competitors to provide server systems that accommodate Nvidia’s latest releases due to its modular system designs, advanced cooling and power systems, and close collaboration with Nvidia regarding software and hardware integration. This positions SMCI to gain disproportionately as Nvidia’s Blackwell-based systems grow. The company plays a crucial role as a supplier of custom, high-density GPU servers for Nvidia’s data center clients.
So, is SMCI stock appealing after the recent surge? We believe SMCI stock appears fairly valued at its current market price of $47.50, though some concerns persist. Our assessment comes by comparing the current valuation of SMCI stock with its operational performance over recent years, along with its current and historical financial status. Our evaluation of Super Micro Computer across key metrics such as Growth, Profitability, Financial Stability, and Downturn Resilience reveals that the company maintains a strong operating performance and financial status, as detailed below. That said, if you are looking for upside with lower volatility than individual stocks, the Trefis High Quality portfolio offers an alternative that has outperformed the S&P 500, providing returns exceeding 91% since its inception.
How Does Super Micro Computer’s Valuation Compare to The S&P 500?
Based on the price you pay per dollar of sales or profit, SMCI stock appears slightly undervalued in relation to the broader market.
• Super Micro Computer possesses a price-to-sales (P/S) ratio of 1.4 compared to a figure of 3.1 for the S&P 500
• Furthermore, the company’s price-to-free cash flow (P/FCF) ratio stands at 990.2 in contrast with 20.9 for the S&P 500
• Additionally, it has a price-to-earnings (P/E) ratio of 25.4 versus the benchmark’s 26.9
How Have Super Micro Computer’s Revenues Grown Recently?
Super Micro Computer’s revenues have experienced significant growth in recent years.
• Super Micro Computer has recorded an average revenue growth rate of 68.1% over the past three years (compared with a 5.5% increase for the S&P 500)
• Its revenues have increased by 82.5% from $12 billion to $22 billion in the last 12 months (compared to a growth of 5.5% for the S&P 500)
• Moreover, its quarterly revenues grew by 19.5% to $4.6 billion in the most recent quarter from $3.9 billion a year ago (versus a 4.8% rise for the S&P 500)
How Profitable Is Super Micro Computer?
Super Micro Computer’s profit margins are significantly lower than most companies in the Trefis coverage universe.
• Super Micro Computer’s Operating Income over the previous four quarters reached $1.3 billion, which marks a poor Operating Margin of 6.1%
• SMCI’s Operating Cash Flow (OCF) during this timeframe was $148 million, indicating a very low OCF Margin of 0.7% (compared to 14.9% for the S&P 500)
• For the last four quarters, SMCI’s Net Income was $1.2 billion—showing a low Net Income Margin of 5.3% (relative to 11.6% for the S&P 500)
Does Super Micro Computer Exhibit Financial Stability?
Super Micro Computer’s balance sheet appears strong.
• Super Micro Computer’s Debt stood at $2.5 billion at the end of the most recent quarter, while its market capitalization is $28 billion (as of 6/28/2025). This indicates a strong Debt-to-Equity Ratio of 8.6% (in contrast with 19.4% for the S&P 500). [Note: A lower Debt-to-Equity Ratio is preferable]
• Cash (including cash equivalents) constitutes $2.5 billion of the total $11 billion in Total Assets for Super Micro Computer. This gives a strong Cash-to-Assets Ratio of 23.6%.
How Resilient Is SMCI Stock During A Downturn?
SMCI stock has demonstrated greater resilience than the benchmark S&P 500 index during some recent downturns. As investors hope for a soft landing in the U.S. economy, how severe could it become if another recession occurs? Our dashboard How Low Can Stocks Go During A Market Crash illustrates how key stocks performed during and after the last six market crashes.
Inflation Shock (2022)
• SMCI stock declined 34.5% from a peak of $35.33 on 7 August 2023 to $23.15 on 21 September 2023, in contrast to a peak-to-trough decline of 25.4% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 19 January 2024
• Since that time, the stock surged to a peak of $118.81 on 13 March 2024 and is currently trading at around $48
Covid Pandemic (2020)
• SMCI stock dropped 45.8% from a high of $2.95 on 5 February 2020 to $1.60 on 18 March 2020, compared to a peak-to-trough decline of 33.9% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 8 June 2020
Global Financial Crisis (2008)
• SMCI stock decreased 66.3% from a peak of $1.14 on 5 June 2007 to $0.39 on 13 November 2008, as opposed to a peak-to-trough decline of 56.8% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 22 December 2009
Putting All The Pieces Together: What It Means For SMCI Stock
In conclusion, Super Micro Computer’s performance across the aforementioned parameters is as follows:
• Growth: Extremely Strong
• Profitability: Very Weak
• Financial Stability: Very Strong
• Downturn Resilience: Strong
• Overall: Strong
This aligns with the stock’s moderate valuation, which leads us to believe it is fairly priced, supporting our assessment that SMCI is an ambivalent stock to buy.
Putting All The Pieces Together: What It Means For SMCI Stock
Super Micro Computer displays a mixed fundamental profile. On one hand, its growth is exceptionally strong and its financial stability remains positive, with the company also demonstrating resilience during downturns. However, profitability is a significant shortcoming. Margins considerably trail those of competitors and have been decreasing. Adding to investor worries are corporate governance concerns, including previous allegations of accounting irregularities, SEC filing delays, and scrutiny from short-sellers. Despite the company’s efforts to address these issues, caution is advisable when considering SMCI stock.
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