SUPER MICRO COMPUTER, INC. (SMCI): what the price requires

At today's price, SUPER MICRO COMPUTER, INC. (SMCI) is priced for +13.1% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.

Generated: 2026-07-14 · Exported: 2026-07-17 · Source: https://boothcheck.com/report/SMCI

Headline

FieldValue
TickerSMCI
CompanySUPER MICRO COMPUTER, INC.
Sector / IndustryTechnology
Current price$27.62/sh

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin needed1.1%
Operating margin today4.4%
Margin compression implied-3.3pp
Implied growth13.1%
Multiple paid14x operating income

The operating-margin requirement is derived from the framework's value band at year 5, a separately labeled basis from the headline growth/duration solve.

Solve inputs: computed at a 10.5% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~6pp.

Reconcile: at the x-ray's 9.3% required return this reads ~5.7%/yr; the models below use their own rates.

How unusual the bet is: within-range

ReferenceValue
vs own history-0.41σ
cohort percentile (of 177 peers)18
sustained it ~5 years at this level54%
implied end-window share0%

Valuation X-Ray

The price is justified by relative-multiple and growth-DCF.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset1.27x5expensive
Earnings1.34x3expensive
Relative0.41x5justifies
Growth0.80x1justifies

Families that justify the price: Relative, Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.5%); the inversion above states its own rate.

Per-Model Detail (n=14)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$0.00—noNegative/zero FCF — equity value floored at $0
DCF Exit MultipleGrowth$0.00—noNegative/zero FCF or EBITDA — equity value floored at $0
Relative ValuationRelative$50.080.55xyesP/E 28x (static sector reference · 2026-04), scenarios: 22.4x / 28.0x / 33.6x (bear / base = reference held flat / bull), EV/EBITDA 20x
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset$19.481.42xyesBV/sh $10.94, ROE (TTM) 16.5%, ke 9.3%
Two-Stage Excess ReturnAsset$25.661.08xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$34.540.80xyesRev $33.7B, growth 30% (input: historical growth; tapered), Terminal P/S: 0.5x / 0.6x / 0.7x (bear / base = today's held flat / bull, cap 12x)
Peter Lynch Fair ValueRelative$66.850.41xyesEPS $1.91, growth 35% (input: historical EPS growth), PEG=0.44 (Undervalued)
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$8.093.41xyesNormalized EBIT (5y avg op income, one-time charges added back) $0.98B × (1−21%) / WACC 7.5% → EPV (no growth)
Residual IncomeAsset$25.961.06xyesBV $10.94 + 5yr PV of (ROE (TTM) 16.5% − Kₑ 9.3%) × BV; BV grows 8.8%/yr
Graham NumberAsset$21.691.27xyes√(22.5 × EPS $1.91 × BVPS $10.94) — Graham's conservative floor
EV/EBITDA RelativeRelative$39.680.70xyesEBITDA $1.56B × sector EV/EBITDA 20.0x
FCF YieldEarnings——no—
SBC-Adj FCF YieldEarnings——no—
Ben Graham FormulaEarnings$61.630.45xyesEPS $1.91 × (8.5 + 2×15.0%) × (4.4 / 5.3%)
ROIC-Justified P/BAsset$6.354.35xyesBV $10.94 × (ROIC 4.4% / WACC 7.5%)
P/Sales SectorRelative$292.120.09xyesRevenue $33.70B × sector P/S 6.0x
PEG Fair ValueRelative$71.620.39xyesEPS $1.91 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x
Earnings YieldEarnings$20.651.34xyesEPS $1.91 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net debt$3.4b
Net debt / NOPAT (after-tax)2.98x
Net debt / operating income (pre-tax)2.36x
Interest coverage11.2x
Share count CAGR (dilution)6.5%
Burning cashyes

Bullet Takeaways

Bull Case

Super Micro's balance sheet is a wager on its own order book, and management keeps pressing the bet. The company carries about $4.7 billion of gross debt against $1.3 billion of liquid assets and shows operating cash consumption, not because the business loses money (trailing operating income runs about $1.5 billion, covering interest 11 times) but because every dollar of capital is being poured into inventory and receivables to feed a revenue line that more than doubled year over year. The March quarter printed $10.2 billion of net sales versus $4.6 billion a year earlier, with net income of $483 million and gross margin recovering to 9.9% from 6.3% in the December quarter. A management team guiding the June quarter to $11.0 to $12.5 billion and the fiscal year to $38.9 to $40.4 billion while levering into working capital is telling you exactly what it believes demand looks like.

The product position earns the confidence. Super Micro ships AI infrastructure at the rack-cluster level, and its 10-K describes delivering "entire clusters of racks, with both liquid-cooled and air-cooled options, per customer requirements" (FY2025 10-K, accession 0001375365-25-000027). Liquid cooling matters because the current GPU generation runs too hot for air at density, and the vendor that integrates cooling, power, and networking at the rack level ships faster than one assembling parts. The March quarter's mix shows both engines running: large data-center and OEM revenue of $7.4 billion (up 183% year over year) and an enterprise channel that grew 46% to $2.8 billion, up 45% sequentially, meaning the business is broadening beyond a handful of hyperscale buyers even as those buyers scale.

The price does not require heroics from here. At about 14 times operating income, roughly 15 times trailing earnings of $1.91 per share, the priced-in requirement is about 12.9% annual operating growth for five years, a fraction of the current pace, sitting in the lower half of the sector's multiple range; historically, a majority (about 55%) of comparable fast-growers sustained that requirement over five years. Peer multiples and growth projections both land above today's $28.31 (July 2026), with the sector-relative reads sitting more than 40% higher. For a company guiding to roughly $40 billion of annual revenue, the market is paying a general-purpose-hardware multiple for AI-infrastructure growth.

Bear Case

The structural truth about Super Micro is that it is a single-digit-margin assembler in a business the market keeps narrating as a technology franchise. Gross margin was 9.9% in the good quarter and 6.3% in the quarter before it; the value in an AI server accrues overwhelmingly to the GPU vendor, and everyone downstream competes on speed and price. The 10-K says it without decoration: "The market for our products is highly competitive, rapidly evolving and subject to new technological developments, changing customer needs and new product introductions. We compete primarily with large vendors of x86-based general purpose servers and components" (FY2025 10-K, accession 0001375365-25-000027). Dell and the ODMs build the same racks around the same chips, and every generation reopens the bidding.

The revenue is as concentrated as it is spectacular. The filing's own risk language leads with it: "Our sales are concentrated in a few large customers" (accession 0001375365-25-000027), and the March quarter's sequential swing showed what that means in practice, with large data-center revenue dropping 31% quarter over quarter on deployment timing even while the annual comparison tripled. The same filing flags "extended payment term arrangements with certain customers" and the attendant collection risk (accession 0001375365-25-000027); a company financing its customers' AI build-outs through receivables while borrowing to fund inventory is running working-capital risk at both ends of the pipeline. Net debt stands at about $3.4 billion, the share count has grown about 6.5% a year over four years as converts and offerings funded the ramp, and the cash-flow line is negative in the middle of the boom, which is precisely when it should not be.

The valuation methods that do not extend the boom refuse to reach the price. Capitalizing what the business has earned on average over five years supports a small fraction of today's $28.31, because the current scale is roughly two years old, and the asset-based reads sit meaningfully below the price. Those methods will look foolish if AI infrastructure spending compounds; they exist for the scenario where a capex cycle digests, hyperscalers pause between GPU generations, or a share shift to a rival integrator turns 12.9% required growth into a miss. In that scenario the stock owns single-digit margins, concentrated customers, negative cash conversion, and debt, and the multiple has a long way down to travel. The December quarter's 6.3% gross margin is the preview: one quarter of pricing pressure cut the margin by a third, and nothing in the operating structure prevents the next one.

Valuation

The market pays about 14 times Super Micro's company-wide operating income, and inverted, $28.31 (July 2026) requires roughly 12.9% annual operating growth for five years. Three context lines calibrate that demand: it is far inside what the company has recently delivered (the March quarter's revenue more than doubled year over year), the multiple sits in the lower half of the technology peer range, and about 55% of comparable fast-growers historically sustained this pace over five years. By the standards of AI-linked names, this is a modestly priced growth requirement; the priced-in assumption reads as broadly consistent with plausible outcomes.

The families disagree in the shape typical of a business whose scale is newer than its history. Sector-relative multiples are the generous ones, landing 40% or more above the price (a sector-median earnings multiple applied to trailing earnings of $1.91 per share reaches $48, and growth-adjusted variants land higher), while the growth projections sit about 25% above. The reads anchored to history or book value do not reach it: five-year average earnings power supports only a fraction of the price because most of that average predates the AI ramp, and book-based methods land around $20 to $26 against $10.94 of book value per share earning a 16.5% trailing return on equity. The pattern says the price is paying for the current scale persisting, not growing exotically, just persisting, which is also its main vulnerability if the data-center cycle breathes.

The financial engine is the tension in the story. Trailing operating income of about $1.5 billion covers interest 11 times, but the company consumes cash as inventory and receivables scale with revenue, carries about $3.4 billion of net debt (roughly 2.2 times trailing pre-tax operating income), and has grown its share count about 6.5% a year across the funding cycle. Fiscal-year guidance of $38.9 to $40.4 billion in sales with a $11.0 to $12.5 billion June quarter is the near-term test: delivery converts the working-capital build into earnings, while a miss leaves the build financed and unsold. Gross margin is the decisive line item at this price; the difference between the December quarter's 6.3% and the March quarter's 9.9% is the difference between a stock that looks cheap and one that looks correctly discounted.

Catalysts

The June-quarter report, due on Super Micro's usual early-August cadence, is the year's decisive print: management guided fourth-quarter net sales to $11.0 to $12.5 billion and full fiscal 2026 to $38.9 to $40.4 billion, so the quarter simultaneously settles the annual guide and sets the fiscal 2027 baseline. The March quarter cleared its bar emphatically: $10.2 billion of revenue against $4.6 billion a year earlier, GAAP earnings of $0.72 per share, non-GAAP $0.84 versus a $0.61 consensus, and gross margin back at 9.9% after the December quarter's 6.3%. The stock's post-earnings surge came from the margin recovery more than the revenue, and margin is what the next print gets judged on.

The mix data provides the two trends to track. Large data-center and OEM revenue ($7.4 billion, 72% of the quarter) tripled year over year but fell 31% sequentially on deployment timing, while the enterprise channel grew 45% sequentially to $2.8 billion. Lumpy hyperscale deployments layered over a steadier enterprise base means single quarters will keep swinging; the enterprise line's trajectory is the better read on durable demand. New GPU-platform ramps (each generation shifts the cooling and power bill of materials toward integrated rack vendors) and any disclosed large-customer wins or losses are the events most likely to move share expectations between prints.

The financing calendar matters more here than for most growth names. With about $4.7 billion of gross debt, negative operating cash flow during the ramp, and a share count that has grown about 6.5% annually, any new convertible issuance, refinancing, or working-capital facility is a direct signal about how management funds the next leg, and on what dilution terms. The wide spread in street targets reflects exactly that uncertainty about execution and funding, which is why each quarterly gross-margin print carries more repricing power than the revenue line above it.

Peer Cohorts (Per Segment, With Filing Citations)

Server and storage systems (single operating segment) (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

FQ3 2026 earnings release, May 5, 2026 · FQ3 2026 earnings release and analyst coverage, May 5-6, 2026

View the full interactive SMCI report on boothcheck