Recommendation: Buy
| Entry Date | Symbol | Recommendation | Entry Price (USD) | Target 1 (USD) | Target 2 (USD) | Holding Duration | Position Status | Return(%)* |
|---|---|---|---|---|---|---|---|---|
| 28 Jan, 26 | SMCI | Buy | USD 31.2 | USD 32.8 | USD 35.0 | 50 days | Closed |
10.26%
|
*Return(%) represent the percentage change between the entry price and exit price of the recommendation.
Data Powered by EOD Historical Data (“EODHD”).
Super Micro Computer, Inc., together with its subsidiaries, develops and manufactures high performance server and storage solutions based on modular and open architecture in the United States, Europe, Asia, and internationally. Its solutions range from complete server, storage systems, modular blade servers, blades, workstations, full racks, networking devices, server sub-systems, server management software, and security software. The company provides application-optimized server solutions, rackmount and blade servers, storage, and subsystems and accessories; and server software management solutions, such as Server Management Suite, including Supermicro Server Manager, Supermicro Power Management software, Supermicro Update Manager, SuperCloud Composer, and SuperDoctor 5. In addition, it offers server subsystems and accessories comprising server boards, chassis, power supplies, and other accessories. Further, the company provides server and storage system integration, configuration, and software upgrade and update services; and technical documentation services, as well as identifies service requirements, creates and executes project plans, and conducts verification testing and technical documentation, and training services. Additionally, it offers help desk and on-site product support services for its server and storage systems; and customer support services, including ongoing maintenance and technical support for its products. The company provides its products to enterprise data centers, cloud computing, artificial intelligence, and 5G and edge computing markets. It sells its products through direct and indirect sales force, distributors, value-added resellers, system integrators, and original equipment manufacturers. The company was incorporated in 1993 and is headquartered in San Jose, California.
Rapid International Revenue Expansion: Geographic diversification improved materially in Q1 FY26, with Asia revenue increasing 143% year-over-year and Europe rising 11%, driven by major hyperscale data center buildouts outside the U.S.
Raised Full-Year Revenue Outlook Signaling Demand Confidence: For fiscal FY26, management increased revenue guidance to at least USD 36 billion, up from its previous outlook of at least USD 33 billion
Significant Decline in Net Income: Net income in Q1 FY26 decreased to USD 168 million, compared with USD 424 million in Q1 FY25, marking a drop of more than 60% year-over-year
Sharp Gross Margin Compression: Non-GAAP gross margin fell to 9.5% in Q1 FY26, down materially from 13.1% in Q1 FY25
Supermicro faces elevated execution risk as rapid AI-driven expansion requires sustained margin recovery, disciplined working capital management, and successful scaling of complex next-generation infrastructure platforms amid intensifying competition
| Entry Price | Support* | Target 1** | Target 2** |
|---|---|---|---|
| 31.2 | 28.0 | 32.8 | 35.0 |
Data Source: REFINITIV, Analysis: StockNextt
*Support can be considered as an indicative stop-loss, and if prices move below that level on closing basis individuals may evaluate exiting the position depending on their risk appetite, previous holdings, and other factors considered. The support and resistance levels may need to be re-evaluated within 4-6 weeks’ time frame depending on the stock price movements from the date of recommendation on the stock.
**Target prices may vary by ±0.5% depending on market volatility.
Revenue Performance Impacted by Shipment Timing: Supermicro reported net sales of USD 5.0 billion in Q1 FY26, reflecting a decline from both the prior quarter and the previous year as shipment delays tied to complex AI rack configuration upgrades shifted approximately USD 1.5 billion of revenue into Q2. Management emphasized that order intake remained exceptionally strong, with new bookings exceeding USD 13 billion, underscoring sustained customer demand despite short-term revenue deferral.
AI Platforms Driving Core Business Momentum: The company’s operational engine continues to be its AI-optimized infrastructure portfolio, with AI GPU platforms accounting for over 75% of total Q1 revenue. High-volume shipments of NVIDIA Blackwell Ultra GB300, B300 platforms, RTX Pro systems, and AMD MI-series solutions reinforced Supermicro’s market leadership across hyperscale, enterprise, and sovereign AI deployments.
Strategic Expansion of Data Center Building Block Solutions (DCBBS): Supermicro significantly advanced its transformation into a full-scale data center infrastructure provider through its DCBBS ecosystem, integrating rack-scale servers, liquid cooling technologies, power management, storage, networking, and software into turnkey AI factory deployments. Early shipments to key customers and growing pipeline adoption position DCBBS as a higher-value growth driver over the medium term.
Global Manufacturing Scale-Up to Support AI Demand: To meet surging demand, the company expanded production across Silicon Valley, Taiwan, Malaysia, the Netherlands, and emerging Middle East locations, targeting capacity of 6,000 racks per month — including 3,000 liquid-cooled racks — by fiscal year-end. While these expansions required substantial upfront investment, they materially enhanced supply chain resilience and long-term delivery capability.
Margin Compression Amid Strategic Ramp Investments: Non-GAAP gross margin declined to 9.5% in Q1 FY26 from 13.1% in Q1 FY25, reflecting higher costs tied to next-generation AI platform ramps, customer-specific engineering investments, and large-scale deployment economics. Management indicated margins remain under pressure in the near term but are expected to recover as scale efficiencies and higher-margin solution offerings mature.
Considering recent key business, financial updates, current trading levels, and key business risks, a ‘Buy’ recommendation has been given on Super Micro Computer, Inc. (NASDAQ: SMCI) at the closing market price of USD 31.20, as on Jan 27, 2026.
Data Powered by EOD Historical Data (“EODHD”).
Sector: Technology Industry: Computer Hardware
| Company | Change (USD) | Price (USD) | Trailing PE (x) | Forward PE (x) | Price Sales TTM (x) | Price to Book Value (x) | Enterprise Value to Revenue (x) | Enterprise Value to EBITDA (x) |
|---|---|---|---|---|---|---|---|---|
| SMCI Super Micro Computer Inc |
2.88 10.37% | 30.66 | 49.25 | 28.90 | 5.69 | 17.11 | 5.65 | 57.68 |
| DELL Dell Technologies Inc |
-9.82 2.34% | 409.50 | 24.44 | 15.65 | 1.22 | 4.39 | 1.34 | 12.81 |
| ANET Arista Networks |
4.74 2.87% | 169.67 | 39.49 | 31.45 | 13.08 | 11.15 | 12.18 | 31.54 |
| HPQ HP Inc |
0.32 1.38% | 23.50 | 9.33 | 8.67 | 0.56 | - | 0.70 | 7.42 |
| WDC Western Digital Corporation |
34.10 4.79% | 746.23 | - | 14.77 | 2.09 | 2.34 | 2.69 | -26.3627 |
Data Powered by EOD Historical Data (“EODHD”).
Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.
Related Risks: This report may be looked at from high-risk perspective and recommendations are provided are for a short duration. Recommendations provided in this report are solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.
Note 1: Past performance is not a reliable indicator of future performance.
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels as on January 28, 2026. The reference data in this report has been partly sourced from REFINITIV.
Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned has been achieved and is subject to the factors discussed above.
Note 4: StockNextt reports are prepared based on the stock prices captured either from REFINITIV or Trading View. Typically, REFINITIV or Trading View may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Target: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Target 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Target 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
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