Super Micro Computer: Why It's Still Worth Having In Your Portfolio (Archive)
SMCI combines robust backlog growth, moderated valuations, and technicals that still favor outperformance.
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
- Strong RPO (an indicator of revenue backlog) growth in recent quarters gives me confidence in SMCI's ambitious $40 billion FY26 revenue outlook.
- Margin erosion concerns are starting to be reflected in stock expectations, which I view as a positive sign as some sources of bad news gets priced in.
- Valuations have moderated sharply, and the stock seems attractive given the high-growth potential ahead. SMCI vs SPX500 also looks primed for an alpha-generating move.
- A diminishing trend of result surprises vs consensus in recent quarter is not ideal. But the market's ask is not excessive, as it is pricing in less than management's guidance.
- Elevated net working capital intensity, particularly due to low payable days from key related parties is a risk monitorable.
Read the full article here.
Disclosures and Disclaimers
Past performance ≠ future results. Not investment advice. See full Disclaimer.
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