Super Micro Computer (NASDAQ:SMCI) supplies AI server products. It has surged significantly since the AI rally started back in 2022, but the past year has been very volatile. SMCI stock is down over 72% from its peak in 2024 but shares have started to slowly turn around in the past week and the gains have accelerated today. Should you buy the dip? Here’s what you need to know:
Why Super Micro Computer (SMCI) Stock Is Down From Its Peak
SMCI started declining in March 2024 as growth tapered and the company failed to meet Wall Street’s revenue and margin targets. Moreover, Hindenburg made accounting allegations in August which triggered a 20% single-day drop and a Department of Justice investigation.
Shares fell another 495 by October 2024, as auditor Ernst & Young resigned. Plus, the company was risking delisting after missing SEC filing deadlines.
Is SMCI Stock Bottoming Out?
Super Micro Computer has been pivoting to capitalize on AI infrastructure demand and analysts have been very optimistic after the Stargate announcement. Full production of Nvidia’s (NASDAQ:NVDA) Blackwell-powered rack-scale solutions began in February 2025. This is the reason behind the stock’s recent surge.
Analysts see 70% revenue growth in FY2025 and the company appointed BDO as a new auditor in December 2024. The delisting concerns are still there due to Nasdaq compliance remaining contingent on filing delayed 10-K and 10-Q reports by February 25, 2025. However, analysts seem much more optimistic than before.
The highest price target of $135 implies roughly 330% upside, but if we look at more recent price targets, the average price target sits at $26.8 (14.54% downside).
Should You Buy the Dip SMCI Stock?
If you look at the fundamentals here, it is a pretty solid stock after its decline. It is cheaper than basically any other AI stock. You’re paying 10.5 times forward earnings and 0.7 times forward sales, that too with almost 64% expected sales growth in FY2025 and about 25.8% EPS growth.
For now, SMCI’s earnings being delayed will keep the stock depressed. If it avoids delisting and files its 10-K and 10-Q reports, this could cause it to surge. SMCI is expected to host a business update conference on February 11 to address its fiscal Q2 performance, which should give investors more clarity on what management’s intentions are.
Considering how expensive most AI stocks are, in my opinion, this is a gamble worth making if you have the appetite.
— Omor Ibne Ehsan
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Source: Money Morning