What To Expect From Super Micro Stock In 2025?

Server maker Super Micro Computer stock (NASDAQ: SMCI) has moved largely sideways in 2025, trading at about $31 per share currently. The stock experienced considerable volatility in 2024, surging to over $114 per share earlier in the year before crashing by over 80% at one point due to multiple issues, although it has recovered a bit since November. What’s next for the SMCI stock, and what recent developments should investors consider?

The biggest issues for SMCI have been related to its corporate governance standards and this has been responsible for much of the sell-off over the past year. Short-seller Hindenburg Research accused the company of accounting irregularities in a detailed report last year. Moreover, the company delayed filing its financial results with the stock exchanges for FY’24, putting it at risk of being delisted by the Nasdaq. Moreover, the company’s public auditor Ernst & Young, resigned last October after it raised concerns regarding the accuracy of the company’s financial statements.

That said, a couple of factors drove a recovery for the stock in recent months. The company said that it had conducted an internal probe led by a special board committee, along with attorneys, and a forensic accounting firm found no evidence of fraud or misconduct by management. The company hired BDO as its new public auditor and also received an extension from Nasdaq to file results by February 25. If SMCI submits its audited financials, it could regain compliance.  On the operational front, demand for servers used for AI will likely remain strong. For perspective, semiconductor fabrication specialist TSMC, which typically reports earnings ahead of the U.S. chip giants, posted solid results for the most recent quarter, indicating that demand for AI chips remains strong. This could be viewed as a proxy for demand for SMCI’s server products, as customers of the big GPU players Nvidia and Advanced Micro Devices deploy the chips using SMCI’s server solutions.  SMCI previously guided net sales in a range of $5.5 billion to $6.1 billion for the second quarter of the fiscal year 2025 compared to about $3.66 billion in the year-ago period.

SMCI is one of a handful of stocks that have increased their value in each of the last 4 years, but that still wasn’t enough for it to consistently beat the market. Returns for the stock were 39% in 2021, 87% in 2022, 246% in 2023, and 7% in 2024. The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, is considerably less volatile. And it has comfortably outperformed the S&P 500 over the last 4-year period. 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. Given the current uncertain macroeconomic environment around rate cuts and multiple wars, could SMCI face a similar situation as it did in 2024 and underperform the S&P over the next 12 months – or will it see a strong jump?

SMCI stock trades at a very reasonable 11x consensus 2025 earnings. Growth rates are also likely to remain strong with consensus calling for about 65% revenue growth this year. That said, SMCI’s corporate governance concerns overshadow its attractive valuation in our view. Issues with internal controls and financial reporting could raise doubts about the company’s long-term ability to deliver shareholder value. Until SMCI’s new auditor signs off on its financials with its regulatory filings for the last year being filed, exercising caution would be prudent. Want to profit from shifts in the AI market? Consider this trade Sell Nvidia, Buy AMD Stock

[1] Returns as of 1/20/2025
[2] Cumulative total returns since the end of 2016

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