Super Micro Computer (NASDAQ:SMCI) surged nearly 10% last week and is up approximately 58% year-to-date. This rise follows broader market gains attributed to potential easing geopolitical tensions due to revived negotiations with Iran, which could facilitate smoother global supply chains beneficial for demand in AI and data center infrastructure.
The company recently announced a plan to issue $2 billion in convertible notes maturing in 2030 to enhance liquidity amid capacity expansion needs. Super Micro has a strong connection to Nvidia’s GPU ecosystem, positioning itself as a primary supplier of custom GPU servers, which drives growth parallel to Nvidia’s product advancements.
Key financial metrics reveal Super Micro’s revenues grew by 82.5% over the last 12 months, totaling $22 billion. The company’s price-to-sales ratio stands at 1.4, below the S&P 500’s 3.1, indicating it may be undervalued compared to peers. However, its profit margins are considered weak, with a net income margin of 5.3% vs. 11.6% for the S&P 500. The overall assessment presents Super Micro as a company with strong growth potential but weak profitability, highlighting caution for potential investors.
