Super Micro Computer Stock at Support Zone – Bargain or Trap?
Super Micro Computer (SMCI) stock should be on your watchlist. Here is why – it is currently trading in the support zone ($45.52 – $50.32), levels from which it has bounced meaningfully before. In the last 10 years, Super Micro Computer stock received buying interest at this level 3 times and subsequently went on to generate 58.9% in average peak returns.
| Peak Return | Days to Peak Return | |
|---|---|---|
| 1/30/2024 | 131.6% | 43 |
| 8/9/2024 | 23.6% | 7 |
| 7/9/2025 | 21.4% | 21 |
But is the price action enough alone? It certainly helps if the fundamentals check out. For SMCI Read Buy or Sell SMCI Stock to see how convincing this buy opportunity might be.
Planning to buy? That’s fine, but do not expose yourself too much to a single stock. Learn what High Quality Portfolio (HQ) can do for your risk profile while giving you strong upside exposure.
Here are some quick data points for Super Micro Computer that should help decision:
- Revenue Growth: 46.6% LTM and 64.7% last 3 year average.
- Cash Generation: Nearly 7.0% free cash flow margin and 5.7% operating margin LTM.
- Recent Revenue Shocks: The minimum annual revenue growth in last 3 years for SMCI was 37.1%.
- Valuation: SMCI stock trades at a PE multiple of 27.3
- Opportunity vs S&P: Compared to S&P, you get higher valuation, higher revenue growth, and lower margins
For quick background, Super Micro Computer provides high-performance modular server and storage solutions, including servers, blades, racks, and networking devices for enterprise data centers, cloud computing, AI, 5G, and edge computing markets.
| SMCI | S&P Median | |
|---|---|---|
| Sector | Information Technology | – |
| Industry | Technology Hardware, Storage & Peripherals | – |
| PE Ratio | 27.3 | 24.1 |
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| LTM* Revenue Growth | 46.6% | 5.2% |
| 3Y Average Annual Revenue Growth | 64.7% | 5.3% |
| Min Annual Revenue Growth Last 3Y | 37.1% | -0.1% |
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| LTM* Operating Margin | 5.7% | 18.7% |
| 3Y Average Operating Margin | 8.2% | 17.8% |
| LTM* Free Cash Flow Margin | 7.0% | 13.3% |
*LTM: Last Twelve Months
What Is Stock-Specific Risk If The Market Crashes?
That said, SMCI isn’t immune to sharp sell-offs. It took a 66% hit during the Global Financial Crisis, almost 60% in the 2018 correction, and about 46% through the Covid pandemic. Even the more recent inflation shock wiped out roughly 34% from its peak. Solid fundamentals matter, but when the market turns, SMCI can still take a serious hit.
But the risk is not limited to major market crashes. Stocks fall even when markets are in good shape – think events like earnings, business updates, outlook changes. Read SMCI Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.
The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.