- Super Micro Computer (SMCI) recently met its February 25 filing deadline, avoiding delisting concerns
- Despite meeting compliance requirements, the stock has fallen approximately 20% over the past five trading sessions
- Investor Friso Alenus remains bullish, citing SMCI’s low P/E multiple of 20.78 compared to the sector median of 24.20
- The company is expanding with a new 3-million-square-foot campus in Silicon Valley, focused on liquid-cooling solutions
- Mizuho Securities analyst Vijay Rakesh reinstated coverage with a Neutral rating and a $50 price target, noting increased competition from rivals like Dell
Super Micro Computer has successfully met its February 25 filing deadline, putting delisting fears to rest. However, the server maker’s stock has experienced a notable decline in the days following this compliance achievement.
The stock has dropped approximately 20% over the past five trading sessions. This comes despite the company clearing a major regulatory hurdle that had worried investors.
Several factors appear to be driving the downturn. The company acknowledged weak internal controls in its Form 10-K filing, promising to address these issues.
Market instability, geopolitical concerns, and potential disruptions in AI spending from competitors like DeepSeek have also contributed to investor caution. These factors have combined to push share prices lower despite the positive news about meeting filing requirements.
Investor Friso Alenus sees the current dip as a buying opportunity. The 5-star investor describes SMCI as an “attractive investment” with considerable upside potential.
Alenus points to SMCI’s relatively low valuation as a key factor. The company’s Price-to-Earnings multiple of 20.78 sits below the sector median of 24.20 and remains close to its historical average of 19.5x.
This valuation comes despite SMCI’s strong growth forecasts. The company has provided guidance of $23.5 to $25 billion for FY2025 and $40 billion for FY2026.
Alenus highlights the major AI capital expenditure investments coming from hyperscalers in the coming year. These planned outlays are expected to drive substantial revenue growth for SMCI.
The investor specifically cites SMCI’s direct-liquid cooling technology as a competitive advantage. “Direct-liquid cooling offers energy efficiency, cost savings and improved performance. This alone should demand a higher multiple,” Alenus states.
Super Micro is actively expanding its liquid-cooling capabilities. The company announced plans to build a third campus in California’s Silicon Valley, covering 3 million square feet.
CEO Charles Liang provided context for this expansion: “We anticipate that up to 30% of new data centers will adopt liquid cooling solutions. Today, Supermicro can deliver 5,000 air-cooled or 2,000 liquid-cooled racks per month to support substantial orders.”
Construction on the new development is set to begin later this year. The project has received support from San Jose Mayor Matt Mahan and is expected to create hundreds of new jobs.
Not all market watchers share Alenus’s optimism. Wall Street analysts have issued a more cautious consensus rating of Hold (Neutral) for SMCI.
Potential upside of approximately 10%
The company currently has 3 Buy ratings, 4 Hold ratings, and 2 Sell ratings from analysts. The 12-month average price target stands at $45.75, suggesting potential upside of approximately 10%.
Mizuho Securities analyst Vijay Rakesh recently reinstated coverage of SMCI with a Neutral rating and a $50 price target. While acknowledging that the company has seen “limited impact from compliance issues,” Rakesh noted increasing competition in the AI server market.
According to Rakesh’s estimates, Super Micro’s share of the global AI server market will be around 23% this year. This represents a slight decline from its 25% market share in 2024, with companies like Dell Technologies emerging as stronger competitors.
For investors looking at SMCI, the story has shifted from delisting concerns to questions about market position and growth execution. The next few quarters will be crucial in determining whether the company can deliver on its ambitious revenue targets while addressing internal control weaknesses.
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