Super Micro Set to Report Q2 Earnings: Buy, Sell or Hold the Stock?

Super Micro Computer, Inc. SMCI is scheduled to report its second-quarter fiscal 2025 business update on Feb. 11.Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.For the fiscal second quarter, the company expects revenues between $5.5 billion and $6.1 billion. The Zacks Consensus Estimate is pegged at $5.8 billion, indicating growth of 58.3% from the year-ago quarter’s reported value.Super Micro Computer expects non-GAAP earnings per share between 56 cents and 65 cents. The Zacks Consensus Estimate for earnings is pegged at 62 cents per share, suggesting a rise of 10.7% from the year-ago reported figure. The figure has been revised upward by a penny over the past 60 days.Image Source: Zacks Investment ResearchSuper Micro Computer earnings beat the Zacks Consensus Estimate thrice in the trailing four quarters while missing it on one occasion, the average surprise being 0.6%.Super Micro Computer, Inc. Price and EPS Surprise Super Micro Computer, Inc. price-eps-surprise | Super Micro Computer, Inc. QuoteEarnings Whispers for Super Micro ComputerOur proven model does not conclusively predict an earnings beat for Super Micro Computer this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here. You can see the complete list of today’s Zacks #1 Rank stocks here.Though SMCI carries a Zacks Rank #3, it has an Earnings ESP of 0.00% at present. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.Factors to Note Ahead of SMCI’s Q2 ResultsSuper Micro Computer has been capitalizing on the current artificial intelligence (AI) boom due to the robust demand for its server and storage solutions. Growing original equipment manufacturer (OEM) component orders have been leading to a spike in the uptake of its AI servers. This is expected to have been a tailwind for the company in the quarter under review.SMCI’s strong investments in high-quality optimized Direct Liquid Cooling solutions for high-end applications are anticipated to have benefited the quarterly performance. The company’s strengthening manufacturing capabilities to support the growth of AI and enterprise rack-scale liquid-cooled solutions and capitalize on the rising demand for liquid-cooled data centers are likely to have been upsides.Super Micro Computer’s solid traction across top-tier data centers, emerging cloud service providers, enterprise/channel and edge/IoT/telco customers due to its robust next-generation AI and CPU platforms are expected to have been upsides. SMCI’s robust building block architecture and operation/production automation systems, offering optimized rack-scale solutions with time-to-market and quality advantages to its customers, are expected to have been other tailwinds.These factors are expected to have aided the performance of Super Micro Computer’s Server & Storage Systems segment. Also, the company’s robust portfolio of infrastructure solutions for 5G and telecom workloads on the back of its continuing partnership with NVIDIA Corporation NVDA is likely to have contributed well to the segment’s top-line growth in the fiscal second quarter.Strong momentum across its H100-based systems and AI inferencing systems is likely to have boosted the performance of the Subsystems & Accessories segment in the fiscal second quarter.SMCI’s Price Performance & ValuationSuper Micro Computer shares have plunged 51.5% over the past year, underperforming the Zacks Computer – Storage Devices industry’s decline of 4.2%. The company has also underperformed the 12.9% and 57.9% rise of its peers Western Digital WDC and Pure Storage PSTG, respectively, in the trailing 12 months.One-Year Price Return PerformanceImage Source: Zacks Investment ResearchNow, let us look at the value Super Micro Computer offers to its investors at current levels. Currently, SMCI is trading at a discount with a forward 12-month price-to-earnings (P/E) of 11.75X compared with the industry’s 16.06X.Forward 12-Month P/E RatioImage Source: Zacks Investment ResearchInvestment Thesis for SMCI StockSuper Micro Computer is rapidly emerging as a dominant force in AI infrastructure, leveraging its liquid cooling leadership, scalable manufacturing and broad AI product portfolio to drive sustained long-term growth.The latest announcement of ramping up the production of its latest AI data server solution that features NVIDIA’s Blackwell platform will boost Super Micro Computer’s revenue growth in the upcoming quarters. The company’s strong cash flow generation, expanding margins and accelerating AI-driven demand reinforce its investment appeal.Conclusion: Hold SMCI Stock NowGiven the strong fundamentals, low valuation multiple and promising long-term growth prospects in the AI infrastructure market, it would be wise for investors to hold Super Micro Computer shares. The company is well-positioned to continue delivering robust growth, particularly as the demand for AI remains strong.Free Today: Profiting from The Future’s Brightest Energy SourceThe demand for electricity is growing exponentially. At the same time, we’re working to reduce our dependence on fossil fuels like oil and natural gas. Nuclear energy is an ideal replacement.Leaders from the US and 21 other countries recently committed to TRIPLING the world’s nuclear energy capacities. 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