Key Takeaways
- Super Micro Computer fell 10% today with no company news, as AI hardware selling continued after Democrats’ midterm wins.
- Celestica, ASE Technology and Everpure fell harder on fears that data center building could slow.
- Two days earlier, Super Micro raised its fiscal 2027 revenue outlook to $72 billion to $82 billion.
- At less than half its usual forward P/E, Super Micro is priced for a slowdown, though its cash burn is a real risk.
Super Micro Computer (SMCI) stock fell 10% today, and nothing the company said explains it. The AI hardware selloff that began Wednesday, after Democrats’ bigger-than-expected midterm wins, deepened this morning.
Celestica (CLS) fell 13%, chip packager ASE Technology (ASX) dropped 17% and storage maker Everpure (P) slid 15%, with no news of their own. All three sell into the same data center buildout.
Investors shrugged off a raised outlook
On Tuesday, Super Micro reported $19.9 billion of September-quarter revenue and raised its fiscal 2027 outlook (the year ending June 2027) to $72 billion to $82 billion. Going in, analysts expected $70.3 billion for fiscal 2027 and $81.7 billion for fiscal 2028:
So the top of the new range is about what analysts had penciled in for a year later.
Investors are worried about Texas
Democrat Gina Hinojosa, who promised a data center moratorium, unseated Texas Gov. Greg Abbott on Tuesday. Texas holds more than a quarter of the US data center capacity planned through 2030, according to Yahoo Finance. Data center developer Applied Digital (APLD) fell 16% today on fears about permits.
Super Micro needs its biggest customers to keep building: one made up 44% of September-quarter revenue. Inventory rose to $15.1 billion at Sept. 30, from $12.9 billion in June.
TIKR tracks 18 analysts on Super Micro Computer. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Super Micro Computer, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Super Micro Computer’s Analyst Ratings
Investors sold the suppliers too
Late last month, Celestica reported third-quarter revenue of $5.83 billion, up 83%, and set a $40 billion revenue target for 2027. Investors sold it anyway. ASE and Everpure fell with rival packagers and storage names. Their next reports will show whether orders are holding.
Near its cheapest in five years
At Monday’s close, Super Micro traded at 6.4x forward earnings, less than half its five-year average of 15x:
This week’s drops take it even lower, close to its November 2024 low of 6.2x.
The way I see it, investors are pricing in a slowdown that Super Micro’s orders don’t show. A moratorium is still one state’s campaign promise. What worries me is the cash: operating cash flow was negative $434 million last quarter, and a delayed build means funding even more inventory.
The December-quarter report, expected in early February, will show whether the new range holds.
So what is Super Micro stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
