Should Investors Buy SMCI Stock After a 19% Decline in a Month?

Super Micro Computer, Inc. SMCI shares have plunged 19.1% in the past month, underperforming the broader tech sector’s decline of 12.2%.

Super Micro Computer’s recent decline stems from a mix of broader market weakness. A widespread sell-off in tech stocks, triggered by fears of rising trade tensions and slowing economic growth concerns, has put pressure on the entire sector, including Super Micro Computer.

This decline in the share price of this semiconductor leader raises the question: Should investors take advantage of this decline and buy the dip?

Super Micro Computer One Month Performance Chart

Growth in Data Center and Cloud Customers Drives SMCI

Super Micro Computer’s business expansion is driven by the rising need of artificial intelligence (AI) workloads. As an increasing number of data centers are proliferating and existing ones are scaling up their capacity, the demand for SMCI’s high-performance and energy-efficient servers is rising.

SMCI’s liquid-cooled and modular servers are a success among cloud service providers, government customers and enterprises as these can handle AI at scale. Super Micro Computer has additionally bolstered its AI expertise by partnering with NVIDIA NVDA and integrating NVIDIA’s Blackwell GPUs for high compute power.

SMCI is also leading the Direct Liquid Cooling (DLC) market and has shipped more than 3,000 DLC racks in 2024, which is estimated to be approximately 70% of the global DLC market. To expand its capacity, SMCI is rapidly ramping up its production facilities across Malaysia, Taiwan, Europe, and the United States.

With all these factors at play, Super Micro Computer is projected to achieve $40 billion in annual sales by fiscal 2026. The company is expecting 168% growth from its fiscal 2024 net sales of $14.94 billion, signaling a clear path for accelerated revenue growth.

The Zacks Consensus Estimate for fiscal 2025 revenues is pegged at $23.8 billion, indicating year-over-year growth of 59.2%. The Zacks Consensus Estimate for fiscal 2025 earnings is pegged at $2.52, indicating year-over-year growth of 14%. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

SMCI Leverages Industry-Leading Products to Drive Growth

As Super Micro Computer focuses on delivering high-performance, specialized systems optimized for AI workloads, it has leveraged Intel INTC Gaudi 3 accelerators in its offerings for scalable AI training and inference tasks.

Super Micro Computer also uses Intel’s built-in accelerator engines, such as AMX, QAT, DSA, and IAA, in SMCI’s X13 Systems. Additionally, Super Micro is also using Advanced Mechanical Devices AMD-based accelerators to deliver performance for AI, high-performance computing and data-intensive workloads.

Super Micro Computer’s H14 Series servers use Advanced Micro Devices’ EPYC 9005 CPUs and its GPU-Accelerated Systems utilize Advanced Micro Devices’ Instinct MI325X GPUs. The integration of NVIDIA, AMD and Intel’s microchips in its offerings makes SMCI’s products highly reliable.

Valuation: SMCI Stock Trades at Discount

Super Micro Computer is currently trading at a low price-to-sales (P/S) multiple, far below the Zacks Computer and Technology Sector. Super Micro Computer’s forward 12-month P/S ratio sits at 0.6X, lower than the Zacks Computer and Technology Sector’s forward 12-month P/S ratio of 5.21X.

Conclusion: Buy Super Micro Computer Stock Now

Super Micro Computer is well-positioned to capitalize on the strong momentum from its data center and cloud computing clients. Coupled with its attractive valuation, this Zacks Rank #1 (Strong Buy) stock presents a compelling opportunity for investors to consider adding to their portfolios. You can see the complete list of today’s Zacks #1 Rank stocks here.

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

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