Super Micro Computer Stock Tumbles, But Investors are Piling into Its Call Options - Time to Buy SMCI?

Core Insights - Super Micro Computer, Inc. (SMCI) reported disappointing quarterly results for its fiscal Q1 ending September 30, leading to a significant decline in stock price as investor confidence waned [1] - Despite the downturn, unusual call option activity suggests potential buying opportunities for SMCI [2][6] Financial Performance - SMCI's revenue growth was negative, and net income decreased, with earnings per share (EPS) down 53% due to a major customer delaying AI server and rack orders to the next quarter [4] - Analysts expect a rebound in profitability, forecasting the next EPS to rise to 52 cents per share from 35 cents last quarter, with an average EPS of $2.06 for the fiscal year ending June 30, 2026 [5] Valuation Metrics - SMCI is currently trading at a price-to-earnings (P/E) multiple of 17.2x, which is below its historical 5-year average range of 16.7x to 18.7x [6] - Morningstar indicates the 5-year average P/E has been 18.63x, suggesting that SMCI stock may be undervalued [6] Options Activity - There has been significant call option activity, with large trades for options expiring on January 2, 2026, indicating bullish sentiment among investors [7] - Specifically, approximately 30,900 calls at the $32.50 strike price and 30,800 calls at the $31.00 strike price were traded, representing over 26x and 25.7x the prior number of outstanding contracts, respectively [8] - The breakeven points for these options are $32.78 and $31.70, which are only 3.9% and 0.5% above the current trading price, indicating a low-cost entry point for bullish investors [9]