Why Super Micro Computer Surged Double-Digits in February
But going forward, CEO Charles Liang said the company is aiming to diversify its customer base, not only among large AI data center customers, but in the higher-margin enterprise server business as well. The AI landscape is now shifting from massive training clusters to enterprise and edge inference, so it's no surprise that Super Micro sees opportunity there. And diversification of customers should lead to better bargaining power.
In addition, Liang pointed to the company's new Data Center Building Block Solutions (DCBBS) as a way to improve margins going forward. This is a new end-to-end modular data center construction product enables Super Micro to achieve fast time-to-market and higher margins. Super Micro just rolled out this product last year, and Liang noted DCBBS only accounted for 4% of profit over the last two quarters. As DCBBS ramps up and makes up a larger share of total profit, margins should increase.
To that effect, management predicted a 30 basis point improvement in gross margins in the March quarter. While just a small improvement, it's nevertheless a positive change in trajectory.
Super Micro is among the cheapest of the AI stocks
Even after last month's rise, Super Micro trades at just 14.5 times 2026 earnings estimates, with the fiscal year ending in June, and then just 11.0 times fiscal 2027 estimates. That's very cheap on an absolute basis, and even cheaper relative to most AI stocks.
However, as anyone who has been following Super Micro knows, analyst projections can be off by a lot, given the lumpiness of Super Micro's business and the volatility in its gross margins. Yet if Liang's strategies to regain gross margin work, Super Micro should be able to beat those projections. If that's the case, then the stock is even cheaper than it looks today.
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Billy Duberstein and/or his clients have positions in Super Micro Computer. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
Why Super Micro Computer Surged Double-Digits in February was originally published by The Motley Fool
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