Super Micro Computer, Inc. SMCI is scheduled to report first-quarter fiscal 2025 results on Nov. 5.
For the fiscal first quarter, the company expects revenues between $6 billion and $7 billion. The Zacks Consensus Estimate is pegged at $6.52 billion, indicating growth of 207.5% from the year-ago quarter’s reported value.
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Super Micro Computer expects non-GAAP earnings per share between 67 cents and 83 cents. The Zacks Consensus Estimate for earnings is pegged at 75 cents per share, suggesting a rise of 120.6% from the year-ago reported figure. The figure has been unchanged over the past 60 days.
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SMCI has an impressive earnings surprise history. Its earnings beat the Zacks Consensus Estimate thrice in the trailing four quarters while missing the same on one occasion, the average surprise being 0.6%.
Super Micro Computer, Inc. Price and EPS Surprise
Super Micro Computer, Inc. price-eps-surprise | Super Micro Computer, Inc. Quote
Earnings Whispers for Super Micro Computer
Our proven model does not conclusively predict an earnings beat for Super Micro Computer this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here. You can see the complete list of today’s Zacks #1 Rank stocks here.
Though SMCI carries a Zacks Rank #2, it has an Earnings ESP of -0.11% at present. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Factors Likely to Influence SMCI’s Quarterly Performance
Super Micro Computer has been capitalizing on the current artificial intelligence (AI) boom due to the robust demand for its server and storage solutions. Growing original equipment manufacturer (OEM) component orders have been leading to a spike in the uptake of its AI servers. This is expected to have been a tailwind for the company in the quarter under review.
SMCI’s strong investments in high-quality, optimized Direct Liquid Cooling solutions for high-end applications are anticipated to have benefited the quarterly performance. The company’s strengthening manufacturing capabilities to support the growth of AI and enterprise rack-scale liquid-cooled solutions and capitalize on the rising demand for liquid-cooled data centers are likely to have been upsides.
Super Micro Computer’s solid traction across top-tier data centers, emerging cloud service providers, enterprise/channel and edge/IoT/telco customers due to its robust next-generation AI and CPU platforms are expected to have been upsides. SMCI’s robust building block architecture and operation/production automation systems, offering optimized rack-scale solutions with time-to-market and quality advantages to its customers, are expected to have been other tailwinds.
These factors are expected to have aided the performance of Super Micro Computer’s Server & Storage Systems segment. Also, the company’s robust portfolio of infrastructure solutions for 5G and telecom workloads on the back of its continuing partnership with NVIDIA Corporation NVDA is likely to have contributed well to the segment’s top-line growth in the fiscal first quarter.
Strong momentum across its H100-based systems and AI inferencing systems is likely to have boosted the performance of the Subsystems & Accessories segment in the fiscal first quarter.
SMCI’s Price Performance & Valuation
Super Micro Computer shares have increased 2.4% on a year-to-date basis, underperforming the Zacks Computer – Storage Devices industry, the Zacks Computer & Technology sector and the S&P 500 index’s rise of 19.7%, 23.2% and 20%, respectively.
The company has also underperformed the 24.7% and 40.4% rise of its peers Western Digital WDC and Pure Storage PSTG, respectively, in the year-to-date period.
YTD Price Return Performance
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Now, let us look at the value Super Micro Computer offers to its investors at current levels. Currently, SMCI is trading at a discount with a forward 12-month price-to-earnings (P/E) of 8.07X compared with the industry’s 13.11X.
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Investment Thesis for SMCI Stock
Super Micro Computer is at the forefront of the current AI revolution. It has been riding on its technology and product leadership in the AI infrastructure market, especially with generative AI training and AI inferencing. Its diversified AI portfolio and strong AI integrations into its storage systems are a plus.
Moreover, its diversified business model, which encompasses Graphics Processing Units, AI, core computing, storage, 5G, edge computing and Internet of Things solutions, remains a major positive.
Super Micro Computer is making strong efforts to scale up its production to capitalize on AI prospects and drive its momentum among cloud service providers. It has recently added three new manufacturing facilities in Silicon Valley to support the growth of AI and enterprise rack-scale liquid-cooled solutions and capitalize on the rising demand for liquid-cooled data centers.
Conclusion: Buy SMCI Stock Now
Given the strong fundamentals, low valuation multiple and promising long-term growth prospects in the AI infrastructure market, it would be wise for investors to buy the shares of Super Micro Computer. The company is well-positioned to continue delivering robust growth, particularly as the demand for AI remains strong.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
