How SMCI Stock Is Riding Nvidia's Blackwell Wave
Super Micro Computer stock (NASDAQ:SMCI) increased by nearly 5% during Friday's trading session and stands approximately 35% higher over the past month. Multiple factors have contributed to the stock's rise in recent weeks, such as significant analyst upgrades and the announcement of a $20 billion partnership with Saudi data center company DataVolt. There has also been speculation regarding a possible short squeeze in SMCI stock. As of May 2025, around 20% of SMCI's outstanding shares were held in short positions. This level of short interest could lead to a short squeeze, compelling short sellers to repurchase shares to cover their positions.
Additionally, Nvidia disclosed a solid set of Q1 results last week, which reflects positively on SMCI. Nvidia stated that the rollout of its new Blackwell GPU is progressing well, with these latest products now making up 70% of data center revenue in the previous quarter, indicating that Blackwell sales have roughly doubled from the previous quarter. Super Micro's server solutions are closely linked to Nvidia's GPU ecosystem and roadmap. The company has generally been more agile than its peers in delivering server systems that align with Nvidia's latest products, thanks to its modular system designs, advanced cooling and power systems, and close collaboration with Nvidia regarding software and hardware integration. SMCI is likely to reap substantial rewards as a primary provider of custom, high-density GPU servers for Nvidia's data center customers as the deployment of Blackwell continues to expand.
So, is SMCI stock appealing following the recent surge? We consider SMCI stock to be reasonably valued at its current market price of $43, although there are some reservations. We reach this conclusion by comparing the current valuation of SMCI stock to its recent operating performance as well as its existing and historical financial health. Our evaluation of Super Micro Computer across key metrics of Growth, Profitability, Financial Stability, and Resilience During Downturns indicates that the company maintains a strong operating performance and financial status, as outlined below. However, for those looking for potential upside with lower volatility than individual stocks, the Trefis High Quality Portfolio offers an alternative, having outperformed the S&P 500 and achieving returns exceeding 91% since its inception.
When considering what you pay per dollar of sales or profit, SMCI stock appears slightly undervalued in comparison to the broader market.
• Super Micro Computer holds a price-to-sales (P/S) ratio of 1.2 in contrast to a figure of 3.0 for the S&P 500
• Additionally, the company's price-to-free cash flow (P/FCF) ratio is 174.4 relative to 20.5 for the S&P 500
• Furthermore, it has a price-to-earnings (P/E) ratio of 22.4 compared to the benchmark's 26.4
The revenues of Super Micro Computer have expanded significantly over the past few years.
• Super Micro Computer has experienced an average revenue growth rate of 68.1% in the last 3 years (compared to a 5.5% increase for the S&P 500)
• Its revenues have increased by 82.5% from $9.3 billion to $21 billion in the past 12 months (relative to a 5.5% growth for the S&P 500)
• Moreover, its quarterly revenues rose 19.5% to $5.7 billion in the most recent quarter from $3.7 billion a year prior (compared to a 4.8% improvement for the S&P 500)
Super Micro Computer's profit margins are significantly lower than those of most companies within the Trefis coverage universe.
• Super Micro Computer's Operating Income over the past four quarters amounted to $1.3 billion, which translates to a low Operating Margin of 6.1% (compared to 13.2% for the S&P 500)
• SMCI's Operating Cash Flow (OCF) during this timeframe was $148 million, reflecting a very low OCF Margin of 0.7% (in contrast to 14.9% for the S&P 500)
• For the last four quarters, SMCI's Net Income was $1.2 billion — indicating a low Net Income Margin of 5.3% (compared to 11.6% for the S&P 500)
Super Micro Computer's balance sheet appears robust.
• Super Micro Computer's Debt stood at $2.5 billion at the conclusion of the most recent quarter, with its market capitalization being $25 billion (as of 6/3/2025). This results in a healthy Debt-to-Equity Ratio of 9.7% (in contrast to 19.9% for the S&P 500). [Note: A lower Debt-to-Equity Ratio is preferred]
• Cash (inclusive of cash equivalents) constitutes $2.5 billion of Super Micro Computer's total assets, which amount to $11 billion. This leads to a strong Cash-to-Assets Ratio of 23.6% (relative to 13.8% for the S&P 500)
SMCI stock has demonstrated more resilience than the benchmark S&P 500 index during a few recent downturns. With investors hoping for a smooth landing for the U.S. economy, how severe could the impact be if another recession occurs? Our dashboard How Low Can Stocks Go During A Market Crash illustrates how key stocks performed during and after the last six market crashes.
• SMCI stock declined 34.5% from a peak of $35.33 on 7 August 2023 to $23.15 on 21 September 2023, compared to a peak-to-trough decrease of 25.4% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 19 January 2024
• Since then, the stock has risen to a high of $118.81 on 13 March 2024 and is currently trading at approximately $43
• SMCI stock fell 45.8% from a high of $2.95 on 5 February 2020 to $1.60 on 18 March 2020, versus a peak-to-trough decline of 33.9% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 8 June 2020
• SMCI stock dropped 66.3% from a high of $1.14 on 5 June 2007 to $0.39 on 13 November 2008, compared to a peak-to-trough decline of 56.8% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 22 December 2009
Super Micro Computer displays a mixed fundamental outlook. On one hand, its growth trajectory is exceptionally strong, and its financial stability continues to be sound, with the company also demonstrating resilience during downturns. However, profitability remains a significant weakness. Margins are considerably below those of competitors and have been on a downward trend. Compounding investor worries are governance issues, including previous allegations of accounting irregularities, delays in SEC filings, and scrutiny from short sellers. Although the company has made efforts to address these concerns, a cautious approach is advisable when assessing SMCI stock.
While it may not appear that there is significant upside to SMCI stock, the Trefis Reinforced Value (RV) Portfolio has outperformed its all-cap stock benchmark, comprising the S&P 500, S&P mid-cap, and Russell 2000 benchmark indices, delivering strong returns for investors. Why is that? The quarterly rebalanced blend of large-, mid-, and small-cap RV Portfolio stocks offers a reactive approach to capitalizing on favorable market conditions while mitigating losses in declining markets, as detailed in RV Portfolio performance metrics.
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