Super Micro: Market Still Showing No Love For A Big AI Boost

Stone Fox CapitalInvesting Group LeaderFollow5ShareSavePlay(9min)Comment(1)SummarySuper Micro Computer delivered a record quarter, posting $12.7B in sales and 123% YoY growth, yet the stock barely rallied.The AI server company guided to $12.3B in FQ3 sales and raised FY26 revenue targets to $40B, but these appear conservative given current run rates.Gross margins remain pressured at 6.4% due to discounted contracts, but management expects DCBBS solutions to drive some gross margins above 20%.Despite execution risks and lingering distrust, SMCI trades at just 10x base-case EPS, offering substantial upside if margins and growth materialize.Looking for a portfolio of ideas like this one? Members of Out Fox The Street get exclusive access to our subscriber-only portfolios. Learn More » pingingz/iStock via Getty Images Super Micro Computer, Inc. (SMCI) reported a brilliant quarter, and the stock hardly rallied last week. The good news is that the AI server company didn't fall with the general sell-off in AI stocks, but theThis article was written byStone Fox Capital54.89K FollowersFollowStone Fox Capital is an RIA from Oklahoma. Mark Holder is a CPA with degrees in Accounting and Finance. He is also Series 65 licensed and has 30 years of investing experience, including 15 years as a portfolio manager. Mark leads the investing group Out Fox The Street where he shares stock picks and deep research to help readers uncover potential multibaggers while managing portfolio risk via diversification. Features include various model portfolios, stock picks with identifiable catalysts, daily updates, real-time alerts, and access to community chat and direct chat with Mark for questions. Learn more.Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase of call options or similar derivatives in SMCI over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities. Before buying or selling any stock, you should do your own research and reach your own conclusion or consult a financial advisor. Investing includes risks, including loss of principal.Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.