Super Micro Computer (NASDAQ:SMCI) stock seems to have Wall Street echoing the old adage, “Fool me once, shame on you – fool me twice, shame on me.”
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
The company’s history of accounting errors continues to cast a long shadow, leaving investors quick to punish any revenue or earnings shortfall. That wariness was on full display after SMCI’s underwhelming Q4 Fiscal 2025 results, which sent shares tumbling 22% in the days that followed.
Although net sales of $5.76 billion rose both year-over-year and sequentially, they still missed estimates by $156.37 million. EPS came in at $0.31 GAAP, missing by $0.03, while Q1 FY 2026 non-GAAP EPS guidance of $0.40 to $0.52 fell well short of the $0.59 analysts had penciled in. Management chalked up the shortfall to capital constraints that slowed production scaling and the onboarding of a “major new customer” with unique feature requirements.
That backdrop of missed expectations and cautious guidance would seem like enough to keep investors away – but not everyone is heading for the exits. One top investor, known by the pseudonym Stone Fox Capital, argues the sell-off is far too severe and has instead opened the door to a buying opportunity.
“The key investor takeaway is that the market is selling off Super Micro, but the company appears back on track to ride the AI wave much higher,” says Stone Fox, who ranks in the top 3% of TipRanks’ stock pros.
The investor points to SMCI’s recent $2.3 billion debt raise as a solution to its capital issues, while noting that FY 2026 revenue guidance of $33 billion – though below the earlier $40 billion target – still offers meaningful upside.
In his view, SMCI’s data center building block solutions should help the company avoid margin erosion in any “price war on rack servers” while capturing AI-driven demand from customers racing to scale their online capabilities. With consensus EPS estimates now trimmed to $2.75 for FY 2026, he believes the bar for an earnings beat is set low, making a rebound in investor confidence easier to achieve.
“The AI server solutions provider clearly needs to report a quarterly beat for FQ1 to regain investor confidence, but once this happens, the stock could trade far higher,” Stone Fox concludes, assigning SMCI a Strong Buy rating. (To watch Stone Fox Capital’s track record, click here)
Wall Street, however, is less convinced. SMCI stock carries a consensus Hold (i.e., Neutral) rating, based on 5 Buys, 6 Holds, and 2 Sells. The average price target stands at $47.58, suggesting a modest 7% upside from current levels. (See SMCI stock forecast)
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a tool that unites all of TipRanks’ equity insights.
Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
