Super Micro Computer: Due For A Time Correction (Archive)

This 5-Minute Pitch was originally published on Seeking Alpha before the launch of the Hunting Alphas website. It is shared here to showcase my previous work and track record. New 5-Minute Pitches published on this site will not be disseminated anywhere else.

Elevator Pitch

• Super Micro Computer has delivered a total shareholder return of almost 2050% since the start of the company's FY23. I believe the stock is now due for a time-correction/consolidation.
• The fundamental growth engine remains strong, with healthy backlog growth as evidenced by growing remaining performance obligations. Management's reliable narrative confirms what we see in the numbers.
• Unlike NVIDIA last week before earnings, SMCI today trades at near-peak valuation multiples, reducing the margin of safety for buys.
• The technicals also suggest signs of a local top as Wyckoff phase analysis points towards consolidation vs. the S&P 500, a performance outlook in line with the broader market.
• In addition to tracking key revenue indicators, I am keeping an eye on gross margin deterioration as the company prioritizes market share. A negative surprise here can lead to downside.

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