Super Micro Computer
Design + build-to-order integration of GPU/CPU servers, storage and full liquid-cooled AI racks (Total IT Solutions); revenue is largely hardware pass-through of third-party silicon (Nvidia/AMD/Intel) plus SMCI board/system engineering, with global assembly (San Jose, Taiwan, Malaysia, Netherlands) and building-block modular design
Earnings, margins, COGS & capex
Revenue exploded on AI/GPU rack demand (FY2025 ~$22B, +47%; Q3 FY2026 $10.24B, +123% YoY) but gross margin compressed into the high-single-digits/low-double-digits as SMCI prices aggressively to defend share against Dell and the ODMs and absorbs component, expedite and inventory-reserve costs. Q3 FY2026 showed a margin rebound (GAAP GM 9.9% vs 6.3% prior quarter) on better customer/product mix and lower tariff/expedite/reserve charges, but revenue fell short of consensus (~$12.4B). The model is working-capital heavy and now materially leveraged: total bank debt + converts reached ~$8.8B against ~$1.3B cash at Q3 FY2026, funded by repeated convertible issuance that also dilutes.
Income statement — where each revenue dollar goes
% of revenueOf every $1 of revenue, ~90¢ is cost of goods and ~5¢ operating expense, leaving ~5¢ of operating profit (~5¢ net).
Revenue trend
Margins
up sharply from 6.3% in Q2 FY2026; vs 9.6% in Q3 FY2025; below FY2025 11.1%
recovering; structurally pressured vs 13.8% in FY2024
net income $483M vs $401M in Q2 FY2026, $109M in Q3 FY2025
down from 13.8% in FY2024
COGS structure
Overwhelmingly third-party components -- Nvidia/AMD GPUs and accelerators, CPUs (Intel/AMD), HBM/DRAM (Micron/Samsung/SK Hynix), plus SMCI-designed motherboards, chassis, power and DLC liquid-cooling hardware. GPU-based platforms represented over 80% of sales, so COGS and gross margin are dominated by accelerator pricing/allocation and by expedite, tariff and inventory-reserve charges that spiked margins down in early FY2026.
Capex
Modest relative to revenue -- capacity is added via leased/owned assembly campuses (San Jose, Taiwan, Malaysia expansion) rather than fabs; the capital intensity sits in working capital (inventory + receivables) and debt-funded liquidity, not fixed assets.
Latest earnings
Mixed -- EPS/margin beat, revenue miss. Non-GAAP EPS $0.84 beat ~$0.62 consensus (+35%) and GAAP GM recovered to 9.9% from 6.3%, but revenue $10.24B missed ~$12.4B consensus (-18%); the stock rallied ~20-24% over the following sessions on the margin recovery and reaffirmed full-year guide
Q4 FY2026 revenue $11.0B-$12.5B; FY2026 revenue $38.9B-$40.4B
- Net sales
- $10.24B (+123% YoY, -19% QoQ)
- GAAP gross margin
- 9.9%
- Non-GAAP gross margin
- 10.1%
- Net income
- $483M
- GAAP diluted EPS
- $0.72
- Non-GAAP diluted EPS
- $0.84
- GPU-platform mix
- >80% of sales
Growth drivers
- Nvidia Blackwell / GB200 NVL rack-scale AI systems and next-gen accelerator ramps
- Direct Liquid Cooling (DLC-2) leadership — claimed up to ~40% electricity and ~20% TCO reduction, a differentiator as racks exceed air-cooling limits
- Total IT Solutions / full-rack 'plug-and-play' AI clusters for hyperscalers and neoclouds
- Time-to-market via modular building-block architecture (fast to ship new silicon)
- Global capacity expansion (US + Malaysia) to serve sovereign-AI and enterprise demand
- AMD Instinct and enterprise/edge AI diversification beyond a single accelerator vendor
Reported financials — SEC EDGAR
Audited GAAP figures pulled from SEC filings · latest filing 2025-08-28. The audited primary-source spine — not financial advice.
Revenue — annual (GAAP)
Margins & balance sheet — FY’25
Bull & bear
A pure-play, first-mover on the highest-growth slice of AI infrastructure -- liquid-cooled rack-scale GPU systems -- trading at a low-teens P/E after a deep drawdown (~55% below its 52-week high, ~75% off its 2024 peak), with margins visibly recovering and a ~$40B revenue run-rate.
- FY2026 revenue guided to $38.9B-$40.4B, nearly doubling FY2025's ~$22B -- rare hypergrowth at this scale
- Q3 FY2026 suggested the margin scare was cyclical, not structural: GAAP GM rebounded to 9.9% from 6.3% and non-GAAP EPS beat handily at $0.84
- DLC-2 liquid cooling is a genuine technical moat as air cooling hits physical limits at Blackwell-class power densities
- Valuation is undemanding (~14x TTM EPS of ~$1.91, ~$17.9B cap) relative to AI-infrastructure peers if credibility normalizes
- Roughly tied with Dell atop the OEM server market (~9.5% revenue share, IDC Q4 2025), with optionality from AMD Instinct, sovereign-AI and enterprise on-prem demand
A low-margin, capital-hungry box-assembler whose economics are dictated by Nvidia allocation and hyperscaler pricing, now carrying ~$7.5B net debt and an unresolved accounting-integrity discount while losing marquee AI deals to bigger, better-capitalized rivals.
- Gross margins in the 6-11% range with no durable pricing power -- a commodity integrator caught between silicon suppliers and hyperscaler buyers
- Accounting overhang persists: EY's 2024 resignation, delayed 10-K, DOJ/SEC document subpoenas, and a Mar-2026 SDNY export-control indictment of associated individuals leave restatement/legal tail risk
- Keeps losing marquee AI deals -- HPE won the ~$1B Elon Musk X/xAI order over SMCI and Dell -- and competes on thin margins against far larger, cash-rich rivals despite ~#2 OEM server-revenue share
- Recurring convertible raises pushed total debt to ~$8.8B against just ~$1.3B cash at Q3 FY2026 (net debt ~$7.5B), signalling working-capital strain and ongoing dilution
- Revenue is lumpy and concentration-heavy -- Q3 FY2026 fell 19% QoQ and missed consensus by ~18%, showing how fast hyperscaler order timing swings results
- Nearly all economics ride third-party GPUs (>80% of sales) -- SMCI captures little of the value it moves
What it is worth
Peer-relative (P/E and EV/revenue vs AI-server peers) cross-checked against forward earnings power on the FY2026 revenue guide, adjusted for net debt
~$15-22
margin compression resumes or a restatement/adverse regulatory outcome hits, hyperscaler orders slow, and the leveraged balance sheet (net debt ~$7.5B) plus dilution and lost deals de-rate the multiple further
~$30-38
revenue roughly doubles to ~$39B with gross margin ~9-11%; stock holds a low-to-mid-teens multiple as the governance and leverage discount lingers
~$45-58
margins sustain 10%+, FY2026 lands at/above the high guide (~$40B), probes resolve cleanly, leverage normalizes, and the multiple expands toward peers on ~2x growth
At ~$27.65 and ~$17.9B market cap, SMCI trades at ~14x TTM EPS (~$1.91) -- a discount to Dell/HPE-adjusted AI-infrastructure peers, reflecting thin margins, ~$7.5B net debt, ongoing dilution and the accounting/governance overhang (note EV sits meaningfully above market cap given the leverage). Re-rating hinges on (1) margins holding near/above 10%, (2) clean regulatory/audit resolution, and (3) durable share against Dell/HPE/ODMs. Sell-side 12-month targets average ~$37 (provider means ~$33-37) with a wide reported range (~$15 low to ~$58 high) -- signalling high uncertainty. Ranges below are illustrative scenarios, not a formal QAI price target.
SWOT
Strengths
- First-mover, deep engineering in rack-scale liquid-cooled AI systems (DLC-2)
- Fast time-to-market on new Nvidia/AMD silicon via modular building-block design
- Broadest AI server SKU range and full Total IT Solutions rack delivery
- Close, early-access relationship with Nvidia and AMD
- Revenue scale now ~$40B run-rate — roughly tied with Dell for #1-2 in OEM server revenue (~9.5% share, IDC Q4 2025)
Weaknesses
- Structurally thin, volatile gross margins (single-digit to low-double-digit)
- Heavy reliance on third-party GPUs -- little control over allocation or pricing
- Working-capital-intensive and now leveraged — ~$8.8B total debt vs ~$1.3B cash (net debt ~$7.5B) at Q3 FY2026, with recurring convertible issuance diluting shareholders
- Lingering accounting-credibility overhang (EY resignation, delayed filings, DOJ/SEC subpoenas, plus a Mar-2026 SDNY export-control indictment of individuals -- SMCI not a defendant)
- Far weaker balance sheet and enterprise brand vs cash-rich Dell/HPE
Opportunities
- Liquid cooling becoming mandatory as rack power densities climb -- SMCI's core edge
- Sovereign-AI and neocloud buildouts beyond the top hyperscalers
- Enterprise/on-prem AI adoption widening the customer base
- AMD Instinct ramp diversifying away from Nvidia dependence
- Services/software attach on full-rack deployments to lift margin mix
Threats
- Hyperscaler pricing power and in-house/ODM-direct designs (Wiwynn, Quanta, Foxconn) compressing margins
- HPE and Dell winning marquee AI-server deals (e.g., HPE's ~$1B win for Elon Musk's X/xAI over SMCI and Dell)
- GPU supply allocation and demand-cycle volatility (lumpy hyperscaler orders)
- Renewed regulatory/legal action or a restatement from the accounting/export-control probes
- Customer concentration -- a few large AI buyers drive outsized revenue swings
Moats, dependencies & bottlenecks
Moats
Real lead in rack-scale direct liquid cooling, but Dell, HPE and ODMs are investing hard to close it
Ships new silicon fast; advantage erodes as competitors adopt similar reference architectures
Valuable for allocation but not exclusive -- same vendors supply Dell, HPE and ODMs
Sticky for cluster buyers, but larger OEMs offer comparable turnkey delivery with stronger balance sheets
Enterprise buyers favor Dell/HPE on trust and support; accounting history is a brand liability
Dependencies
Supplier / demand catalyst >80% of sales are GPU platforms; allocation and roadmap timing directly gate SMCI revenue and margin
Customer concentration A handful of large AI buyers drive lumpy revenue; Q3 FY2026 fell 19% QoQ on order timing
Financing / liquidity Working-capital-heavy model funded to ~$8.8B total debt vs ~$1.3B cash at Q3 FY2026; further raises likely dilutive ($2.0B 2030, $700M 2028, $1.725B 2029 converts)
Diversification lever, but still external silicon SMCI does not control
Memory availability and pricing feed directly into COGS and build schedules
Governance / legal Unresolved DOJ/SEC subpoenas (post-EY resignation, Hindenburg Aug-2024 report) plus a Mar-2026 SDNY export-control indictment of associated individuals keep a credibility discount and restatement tail risk
Advantages
- Pure-play leverage to AI rack-scale and liquid-cooling demand
- Fastest broad SKU coverage of new GPU/CPU generations
- Engineering depth in power and thermal design at extreme rack densities
- Global, flexible build-to-order assembly footprint
- Undemanding valuation versus AI-infrastructure peers
Weaknesses
- Thin, cyclical gross margins with no durable pricing power
- Commodity-integrator economics -- value largely passes through to silicon vendors
- Leveraged balance sheet (net debt ~$7.5B) and dilution pressure from convertible-funded growth
- Accounting/governance overhang depressing multiple and enterprise trust
- Loses marquee AI deals and carries a far smaller balance sheet than Dell/HPE despite ~#2 OEM server-revenue share
Bottlenecks
- GPU/accelerator allocation from Nvidia and AMD caps how much SMCI can ship
- Gross-margin ceiling set by supplier pricing above and hyperscaler pricing power below
- Working-capital funding — inventory and receivables outrun operating cash, pushing total debt to ~$8.8B and forcing dilutive raises
- Liquid-cooling and rack-integration capacity / skilled-labor scaling
- Governance credibility -- audit and regulatory resolution needed to re-rate the stock
Top signals & trends
Top signals
Suggests the margin collapse was cyclical (tariff/expedite/reserve, mix), not permanent
Confirms demand is intact at scale despite QoQ volatility
Highlights order lumpiness and hyperscaler timing dependence
Net debt ~$7.5B; working-capital build outrunning cash raises leverage/liquidity and dilution risk
Keeps a governance discount and unresolved legal tail on the name
Competitive pressure on marquee AI accounts despite SMCI's ~#2 overall OEM share
Trends
Structural tailwind for SMCI's DLC-2 liquid-cooling franchise
Wiwynn, Quanta, Foxconn compete on price for the largest buyers
Broadens SMCI's addressable mix but also invites more competition
New demand pools beyond the top US hyperscalers
Pricing competition among Dell/HPE/SMCI/ODMs pressures everyone's gross margin
Ecosystem & competitor graph
Suppliers feed the company; customers pull from it. Line thickness shows the strength of each tie (supply-chain dependency, customer earnings contribution). Hover to isolate a tie.
Dominant GPU/accelerator supplier; >80% of SMCI sales are GPU platforms
EPYC CPUs and Instinct accelerators; diversification lever
Xeon CPUs and some accelerators
DRAM/HBM and storage memory
Upstream foundry for the GPUs/CPUs SMCI integrates
Memory (HBM/DRAM) and storage components
Supplied liquid-cooled rack systems for the Colossus cluster; also a contested account (HPE won a separate ~$1B Musk X order)
Hyperscale AI-infrastructure buyer
GPU-cloud / neocloud buyer of rack-scale AI systems
OCI AI-cloud infrastructure buildout
Enterprise / sovereign-AI and neocloud operators Broadening base beyond top hyperscalers; individually large, lumpy orders
OEM server-revenue co-leader (~10% share, IDC Q4 2025); far stronger balance sheet, enterprise relationships and AI-server momentum
~3.1% OEM server-revenue share (IDC Q4 2025, #5) but won the ~$1B Musk X/xAI AI-server deal over SMCI and Dell; Cray/HPC and services depth
~4% OEM server-revenue share; global scale, aggressive AI-infrastructure push, strong in APAC
Largest AI-server ODM; builds Nvidia rack systems direct for hyperscalers, undercutting branded margins
Major ODM AI-server maker for hyperscalers; direct price competition
Hyperscale-focused ODM (Meta/Microsoft heritage); competes for the largest cloud rack orders
~4% OEM server-revenue share (IDC Q4 2025, ~#3); China-focused and US entity-list-constrained, limiting direct overlap with SMCI's Western AI market
Growing hyperscaler AI-hardware / networking ODM with strong momentum
UCS AI servers plus networking bundle; enterprise reach
Supplier and, via DGX and MGX reference designs, a partial channel competitor