SMCI Doubles Down on DCBBS: Is it the Next Growth Engine?

Super Micro Computer’s SMCI Data Center Building Block Solutions (DCBBS) is expected to grow rapidly with the AI wave and IT infrastructure demand, as the technology is experiencing wider adoption, given that it enables its customers to scale rapidly, simplify deployment, accelerate time-to-market and reduce total cost of ownership.

SMCI’s DCBBS technology combines SMCI’s rack-scale, plug-and-play server architecture with its latest direct liquid cooling technology to optimize processing units for artificial intelligence (AI) and high-performance computing (HPC) workloads. The technology primarily uses NVIDIA Blackwell and AMD platforms for advanced AI computing.

SMCI expects to gain market share rapidly among medium, large and small AI infrastructure deployments. The company is implementing GP300, B200, B300 and MI350 platforms and is set to deploy upcoming NVIDIA, Vera Rubin and AMD Helios platforms in the second half of fiscal 2026. SMCI’s DCBBS accounted for 4% of SMCI’s profit, and the company expects the contribution to rise to double digits by the end of 2026.

In the past year, SMCI has expanded its DCBBS product portfolio with the launch of CDU, L2A heat exchanger, chilled doors, power shelves, battery backup, water tower, dry towers, high-speed switching, data center management software and service. SMCI has plans to roll out 6,000 racks/month, including 3,000 liquid-cooled racks and generate enough revenues so it reaches its $40 billion revenue goal in fiscal 2026.

SMCI’s business is becoming increasingly AI-heavy, with AI GPU platforms contributing more than 90% of revenues. However, SMCI’s current strategy is also causing inventory challenges. Its inventory nearly doubled in second quarter fiscal 2026 to $10.6 billion, up from $5.7 billion in the first quarter of fiscal 2026.

How Competitors Fare Against SMCI

The AI data center market is likely to witness a CAGR of 31.6% from 2025 to 2030, reaching a market size of $934 billion in this timeframe, per a report by MarketsAndMarkets. Big players like Hewlett Packard Enterprise HPE and Dell Technologies DELL are competing with SMCI in this space.

Hewlett Packard Enterprise offers a range of servers, including HPE ProLiant, HPE Synergy, HPE BladeSystem and HPE Moonshot servers. Dell Technologies has built the Dell AI Factory in collaboration with NVIDIA. Dell also collaborated with Red Hat Enterprise Linux AI for Dell PowerEdge servers.

SMCI’s Price Performance, Valuation and Estimates

Shares of Super Micro Computer have plunged 39.1% in the past one year against the Zacks Computer – Storage Devices industry’s growth of 144.1%.

SMCI One-Year Performance Chart

From a valuation standpoint, SMCI trades at a forward price-to-sales ratio of 0.41, lower than the industry’s average of 2.43.

SMCI Forward 12-Month (P/S) Valuation Chart

The Zacks Consensus Estimate for Super Micro Computer’s fiscal 2026 and 2027 earnings implies a year-over-year increase of approximately 7.77% and 33.62%, respectively. Estimates for fiscal 2026 have been revised upward in the past 30 days, while the estimates for 2027 earnings have been revised downward.

Super Micro Computer currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research