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Super Micro Computer (SMCI) stock is spiking more than 20% in early market trading today after issuing a strong fourth-quarter business update yesterday. The solid Q4 update indicates that the artificial intelligence (AI)-driven demand remains robust.
While Super Micro’s revenue is expected to land near the low end of management's guidance, profitability is projected to remain solid. For the fourth quarter of fiscal 2026, Super Micro expects revenue near the lower end of the guidance of approximately $11.0 billion to $12.5 billion. The biggest surprise, however, came on the margins front. SMCI now expects adjusted gross margins of 15% to 17%, nearly double its earlier guidance of 8.2% to 8.4%, driven primarily by a favorable customer and product mix.
In addition, Super Micro exited fiscal 2026 with a record backlog after receiving more than $60 billion in new orders during Q4. Management expects these orders to be fulfilled over the coming quarters, providing strong revenue visibility as AI infrastructure spending continues to accelerate.
The upbeat update was enough to send Super Micro's stock sharply higher before the opening bell. Moreover, here are two compelling reasons to stay bullish on SMCI stock.
Super Micro Is Positioned to Deliver Strong Growth
Super Micro Computer's stock has underperformed the broader market this year. Much of the recent weakness stems from investor concerns over the company's $7 billion capital raise, which raised fears of shareholder dilution.
While SMCI stock lost significant value, its underlying business continues to strengthen, setting the stage for solid revenue and earnings growth ahead.
Super Micro will likely benefit from sustained AI infrastructure spending, a diversified customer base, and initiatives aimed at improving profitability. Super Micro generated $10.2 billion in fiscal third-quarter revenue, representing an impressive 123% year-over-year (YoY) increase. The recent business update indicates that momentum continued into the fourth quarter, with hyperscale cloud providers and enterprise customers maintaining strong spending on AI infrastructure. In addition, the company's large backlog provides solid visibility into future revenue, suggesting that growth is likely to remain strong over the coming quarters.
Customer diversification is becoming an increasingly important investment thesis. Enterprise customers accounted for 28% of total revenue, up from 15% a year earlier, with segment revenue increasing 46% YoY and 45% sequentially. As enterprise AI adoption accelerates, this business is well positioned to become a larger, more durable contributor to revenue growth.
Super Micro is expanding its value proposition through its Data Center Building Block Solutions (DCBBS) strategy, offering integrated infrastructure. This transition toward more comprehensive solutions should strengthen customer relationships, increase switching costs, and support margin expansion over time.
The company is also investing in manufacturing capacity, production automation, operational efficiency, and supplier relationships to support higher shipment volumes while improving operating leverage. As scale increases, these investments are expected to contribute to gradual margin expansion.
The recent capital raise is expected to be used to secure components, expand manufacturing capacity, and support execution against a rapidly growing order backlog.
Overall, Super Micro's operational momentum remains intact. Strong demand for AI infrastructure, improving customer diversification, manufacturing expansion, and a growing portfolio of higher-value solutions support a constructive long-term outlook.
Buy SMCI Stock While It Is Still Cheap
Despite its strong operational momentum, SMCI stock continues to trade at a valuation that appears disconnected from its growth prospects. The company's expanding backlog, improving profitability, and growing demand for its AI infrastructure solutions position it for solid earnings growth in the coming years.
Yet SMCI trades at a forward price-to-earnings (P/E) ratio of just 8.7, which is significantly low for a company that analysts expect to deliver robust earnings growth over the next year.
Wall Street currently projects Super Micro to generate $2.78 in earnings per share (EPS) in fiscal 2027, representing 31.8% YoY growth. Given the company's strengthening fundamentals and expanding margins, there is also room for analysts to raise their earnings estimates over time, providing another potential catalyst for the stock.
Meanwhile, Super Micro's price-to-sales (P/S) ratio of just 0.5 strengthens the view that the shares remain attractively valued relative to their long-term growth potential.
Final Takeaway
Super Micro's stronger-than-expected fourth-quarter update strengthens the view that AI infrastructure demand remains robust and that the company is executing well. With a record backlog, margin expansion, growing enterprise adoption, and a compelling valuation, SMCI stock appears well-positioned for further upside.
While analysts maintain a “Hold” on SMCI stock, Super Micro's combination of strong growth prospects and inexpensive valuation makes it an attractive long-term investment.
On the date of publication, Amit Singh did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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