The last 52 weeks have been characterized by high volatility for Super Micro Computer (SMCI) stock. During this period, SMCI stock reached a high of $66.44. However, the current price of $32.64 implies a deep correction of 51%.
One of the key triggers for the correction was a big revenue miss in Q1. Having said that, the reaction seems to be overdone. The bearish sentiment, however, sustains and is indicated by the fact that SMCI is the third-most-shorted stock by hedge funds.
Amid this bearish stance, SMCI stock looks attractively valued, and an improvement in Q2 numbers can change sentiments at the blink of an eye. SMCI stock can therefore be a potential short squeeze candidate for 2026.
About Super Micro Computer Stock
Headquartered in San Jose, Super Micro Computer is a provider of application-optimized IT solutions for Enterprise, cloud, AI, and 5G. The company’s products include servers, storage systems, switches, software, and support services.
Super Micro Computer has a strong global presence with operations in more than 100 countries. For Q1 FY26, the company reported revenue of $5 billion with a gross margin of $5 billion. For the full year, SMCI expects revenue of $36 billion.
Following the significant earnings miss in Q1, coupled with cash used in operations of $918 million, SMCI stock has corrected by 45% in the last six months. The deep correction seems like a good opportunity to accumulate.
Prospects of Improved Financial Performance
While the Q1 miss impacted SMCI stock, it’s worth noting that the company has guided for Q2 revenue of $10 billion to $11 billion. This is, at the midpoint, more than $2 billion ahead of the analyst consensus of $8.05 billion. Therefore, there is the possibility of a stock trend reversal when Q2 numbers are reported.
From a growth perspective, there are two important points to note. First, SMCI is pursuing aggressive global expansion with new facilities in the U.S., Taiwan, the Netherlands, Malaysia, and the Middle East. The company is aiming to scale production to 6,000 racks per month by the end of fiscal 2026.
Further, SMCI is preparing for Nvidia (NVDA) Vera Rubin and Advanced Micro Devices (AMD) Helios launches in the current calendar year. This will translate into growth in 2027 and beyond. SMCI also expects end-to-end DCBBS (Data Center Building Block Solution) to be a key driver of growth and profitability. However, for the near term, gross margin compression is likely as the company ramps up the mega-scale GB300 optimized rack platform.
From the perspective of financial flexibility, SMCI has entered into a new revolving credit facility worth $2 billion. This is likely to support “operations and growth initiatives.” Once the EBITDA margin expands and cash flow swells, internal cash flows will support bigger investments.
What Analysts Say About SMCI Stock
Based on the ratings of 19 analysts, SMCI stock is a consensus “Moderate Buy.” While six analysts assign a “Strong Buy” rating to SMCI, two analysts have assigned a “Moderate Buy” rating, and eight have a “Hold” rating. On the bearish side, one analyst has a “Moderate Sell” and two have a “Strong Sell” view.
Based on these ratings, analysts have a mean price target of $45.53 currently, which would imply upside potential of 54.8%. Further, with the most bullish price target of $64, the upside potential for SMCI stock is 117.5%.
It’s worth noting that for 2026, analysts expect minor earnings de-growth of 1.16% on a year-on-year basis. However, for 2027, earnings growth is estimated at 49.4%. This is a positive, coupled with the point that SMCI stock trades at an attractive forward price-to-earnings (P/E) ratio of 16.8x. A price-to-earnings-to-growth (PEG) ratio of 0.6x also indicates a possible valuation gap.
On the date of publication, Faisal Humayun Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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