Super Micro Computer, Inc. (SMCI): A Bull Case Theory

We came across a bullish thesis on Super Micro Computer, Inc. on Deep Value Returns’s Substack. In this article, we will summarize the bulls’ thesis on SMCI. Super Micro Computer, Inc.'s share was trading at $40.78 as of September 2^nd. SMCI’s trailing and forward P/E were 24.27 and 15.60 respectively according to Yahoo Finance.

SuperMicro (SMCI) has re-entered the buy list after a sharp pullback, which the market appears to have overreacted to despite strong fundamentals and growth prospects. The company, a key supplier of racks and infrastructure for the ongoing surge in AI investment, trades at just 16x free cash flow while delivering more than 30% year-over-year growth and maintaining a moderately strong balance sheet.

Previously, SMCI reached the analyst’s $60 per share target just before earnings, leading to a downgrade to hold. However, rather than selling into strength, the decision was made to hold through earnings, recognizing the upside potential of its AI infrastructure positioning. The stock subsequently fell 30%, erasing gains, but the conviction remains that the market is undervaluing SMCI.

Similar experiences with Rubrik and Astera Labs illustrate that outcomes can vary, but the long-term thesis remains intact. Despite criticism of management credibility and past execution concerns, the broader AI infrastructure theme and Nvidia’s robust results reaffirm confidence in SMCI’s positioning. Current weakness reflects negative sentiment toward AI names rather than deteriorating fundamentals. The analyst expects sentiment to shift back, with the market once again rewarding free cash flow generation, a pattern seen repeatedly in past cycles.

With expectations now muted, SMCI offers a compelling entry point, especially given its strategic importance in AI data center buildouts. The investment approach is pragmatic: buy when pessimism dominates, sell when optimism peaks. With this reset, the thesis calls for SMCI to reach $60 per share by summer 2026, offering attractive upside from current levels.

Previously we covered a bullish thesis on Super Micro Computer, Inc. (SMCI) by Taylor Nichols in March 2025, which highlighted SMCI’s leadership in AI infrastructure, liquid cooling, and rapid revenue growth. The company’s stock price has appreciated approximately by 19% since our coverage. This is because strong execution and AI-driven demand supported performance. The thesis still stands as SMCI remains pivotal to AI buildouts. Deep Value Returns shares a similar view but emphasizes valuation reset and sentiment.

Super Micro Computer, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 40 hedge fund portfolios held SMCI at the end of the first quarter which was 45 in the previous quarter. While we acknowledge the potential of SMCI as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.