Super Micro Computer (NASDAQ: SMCI) is a developer, and manufacturer of high-performance server, and storage solutions using the modular, and open architecture. With a market cap of over $16 billion, it has carved out a niche within the global Ai industry.
The company is set to release its second quarter fiscal 2025 results on Monday, February 3, 2025. Analysts are eagerly awaiting the results, as it could signal what direction SMCO stock takes in the coming months. Below is an analysis of what to expect.
Q2 2025 Expectations
Analysts forecast Super Micro Computer will report an non-GAAP EPS of $0.54, a 5.9% increase from the $0.51 in Q2 2025. SMCI has beaten estimates twice in the past three quarterly reports.
AI Partnership
Super Micro Computer has benefited a great deal from the rise of AI, and the subsequent rise for high-performance computer architecture solutions.
For instance, in December 2024, the company announced delivery of its new end-to-end data center solution called SuperCluster. The solution is built specifically for Nvidia’s high-performance GPUs. Due to its solutions in the AI space, the company has seen a massive explosion in revenue in recent quarters. However, the company has also faced a set of major reporting challenges.
Super Micro Computer Reporting Challenges
In December 2024, Super Micro Computer announced that it has received an extension from NASDAQ, which had previously planned to delist the firm over reporting errors. The issue was around Super Micro Computer failing to file its Form-1OK in time, which goes against the Nasdaq’s listing rules.
In their announcement, it stated that it had received an extension up to February 25, 2025 to make changes to its reporting procedures. Thus far, great progress has been made, and all previous Form 10-K have been filed. Analysts and investors will be closely watching this quarter’s earnings release to check if the company has gotten its reporting issues in check. Future delays could significantly impact the stock’s price.
The Impact Of DeepSeek
Super Micro Computer, like many other stocks in the Ai sector, took a dive when DeepSeek-R1-Zero, an AI model that uses significantly less computing power, was released. However, some have argued the markets were pricing in the planned sanctions on Taiwan’s chip maker by Trump, with DeepSeek having little to do with it.
An article by AI commentator Timothy Lee points out that while the price of computers has gotten cheaper over the years, so has their use cases, which has led to increased volumes. He points out that the same could happen for AI chips, with an initial dip followed by a resurgence as the volumes rise.
Super Micro Computer (SMCI) Market Performance
SMCI has dipped 44.40% in the past 12 months, and 57.20% in the past six months. It has underperformed the market, as well as underperforming the tech industry. SMCI dipped 4.42% in pre-marketing trading to $27.26 as of 7:50 AM EST on Monday, February 3, 2025.
One of the drivers of this decline is the financial reporting challenges it has experienced in recent quarters. The looming possibility of being delisted from the Nasdaq has also weighed on investors’ choices.
Analysts give the stock a hold rating, with a price target of $26.80, which is a 6.03% downside from its Friday closing price of $28.52. They predict a wide range of prices for the stock, with the highest at $40.00, and the lowest at $15.
Should You Add SMCI To Your Portfolio?
A wait-and-see approach is potentially the most prudent approach when it comes to Super Micro Computer (SMCI). One area of interest should be how it handles the financial reporting challenges in its upcoming earning report.
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