Super Micro Computer (SMCI) has experienced significant growth, rising 829% over the past three years, driven by demand for AI, cloud data centers, and enterprise IT. The company’s revenue grew 110% in FY2024, supported by disciplined scaling. Forecasts suggest approximately $24 billion in revenue for FY2025 and $40 billion for FY2026, indicating a strong growth trajectory. Despite past accounting concerns, the stock trades at an appealing valuation, with analysts projecting a target price of $49, offering around 40% upside. SMCI is well-positioned in the AI infrastructure sector, making it a compelling option for long-term investors, albeit with inherent risks.
Super Micro Computer (SMCI) may include “micro” in its title, but there’s no doubt that this Silicon Valley server and storage giant has experienced remarkable growth in the last three years. With the surge in AI training, cloud data centers, and enterprise IT, Super Micro’s stock has skyrocketed by 829%, aligning with some of the most dynamic trends in technology.
Although the most explosive growth years for the company—2023 and 2024—are now in the past, there is still plenty of runway ahead. Based on anticipated earnings per share growth and only a minor increase in the price-to-earnings ratio, I’m forecasting a 40% return on the stock within the next twelve months.
Let’s address the obvious: Super Micro’s growth trajectory has been anything but understated. The increase in artificial intelligence workloads and the expansion of cloud infrastructure have fostered an environment where the company can flourish. The management has taken bold steps, asserting that the AI revolution is “far more significant than the Industrial Revolution,” and they are positioning Super Micro to capitalize on this shift. If this theory holds—and I believe it will—then the company is well-equipped to leverage opportunities in the coming years.
One notable aspect where Super Micro excels is in liquid-cooled server technology. The CEO has indicated that approximately 30% of new data centers are projected to utilize direct liquid cooling over the next twelve months. This is a significant development, and Super Micro is already a leader in this sector. As reported by Main Street Data, SMCI’s revenue has increased even as segment proportions have remained largely stable.
Now, let’s focus on the numbers. In FY2024, SMCI achieved a remarkable 110% year-over-year revenue growth. Additionally, GAAP net income increased by 80% compared to the previous year. Over the period from FY2021 to FY2024, Super Micro delivered an astounding 60% compound annual growth rate in revenue, while its operating expenses grew by only 25%. The company is expanding with discipline and efficiency, a feat that is becoming increasingly rare in today’s fast-paced tech landscape.
As we progress through FY2025, Q3 results are anticipated in May. For the full fiscal year, management is projecting approximately $24 billion in revenue, which signifies about 60% year-over-year growth. They are also quite optimistic about FY2026, expecting $40 billion in annual revenue. Although this forecast may be ambitious, the overall growth trajectory is undeniably robust—and the valuation seems reasonable given the potential upside that lies ahead.