Key Takeaways Supermicro Q2 FY26 net sales jumped 123% to $12.7B as DCBBS gained traction with AI customers.SMCI trades at a forward P/E of 15.83, below its industry, as management guides FY26 sales of at least $40B.Supermicro faces risks as gross margin slid to 6.3% and debt-to-equity rose to 66.9%.NVIDIA Corporation (NVDA) dominates the artificial intelligence (AI) market but carries a high valuation. By contrast, the smaller AI company Super Micro Computer, Inc. (SMCI) delivered strong quarterly results ...

Momentum investing revolves around the idea of following a stock's recent trend in either direction. In "long context," investors will be essentially be "buying high, but hoping to sell even higher." With this methodology, taking advantage of trends in a stock's price is key; once a stock establishes a course, it is more than likely to continue moving that way. The goal is that once a stock heads down a fixed path, it will lead to timely and profitable trades.While many investors like to look for momentum i ...

Super Micro Computer (SMCI) came out with quarterly earnings of $0.69 per share, beating the Zacks Consensus Estimate of $0.49 per share. This compares to earnings of $0.61 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of +40.10%. A quarter ago, it was expected that this server technology company would post earnings of $0.28 per share when it actually produced earnings of $0.35, delivering a surprise of +25%.Over the last four ...

Company Performance - NetApp's stock closed at $98.33, down 1.01%, underperforming the S&P 500's loss of 0.13% on the same day [1] - Over the past month, NetApp's stock has decreased by 7.25%, contrasting with the Computer and Technology sector's gain of 1.88% and the S&P 500's gain of 0.78% [1] Upcoming Earnings - NetApp is expected to report an EPS of $2.07, reflecting an increase of 8.38% from the same quarter last year [2] - Revenue is anticipated to reach $1.7 billion, indicating a 3.32% increase compared to the previous year [2] Fiscal Year Estimates - For the entire fiscal year, earnings are projected at $7.88 per share, representing an 8.69% increase year-over-year [3] - Revenue estimates for the fiscal year stand at $6.76 billion, showing a 2.89% rise from the prior year [3] Analyst Estimates - Recent changes to analyst estimates for NetApp are crucial as they reflect the evolving business landscape [4] - Upward revisions in estimates indicate analysts' positive outlook on the company's operations and profit generation capabilities [4] Zacks Rank and Valuation - The Zacks Rank system, which ranges from 1 (Strong Buy) to 5 (Strong Sell), currently rates NetApp at 3 (Hold) [6] - NetApp's Forward P/E ratio is 12.61, which is a discount compared to the industry average Forward P/E of 23.29 [6] PEG Ratio - NetApp has a PEG ratio of 1.77, aligning with the industry average PEG ratio of 1.77 [7] Industry Overview - The Computer-Storage Devices industry is part of the Computer and Technology sector and holds a Zacks Industry Rank of 24, placing it in the top 10% of over 250 industries [8] - Research indicates that industries in the top 50% outperform those in the bottom half by a factor of 2 to 1 [8]

Core Insights - Super Micro Computer (SMCI) experienced a significant growth in server and storage revenues, which increased by 50.2% year over year, reaching $21.31 billion in fiscal 2025 from $6.5 billion in fiscal 2023, driven by the rising demand for AI servers [1][11] Revenue Growth - The server and storage segment represented 92.2% of total revenues in fiscal 2023, increasing to approximately 97% in fiscal 2025, indicating the segment's growing importance within the company's revenue structure [2] - SMCI projects total revenues of $36 billion in fiscal 2026, reflecting a substantial 64% year-over-year growth [4] Market Position and Partnerships - Partnerships with vendors such as NVIDIA and Advanced Micro Devices enable SMCI to provide cutting-edge GPU-powered platforms, which are in high demand among cloud providers and AI projects [3] - The company is expanding its operations in Europe, Asia, and the Middle East, which presents additional growth opportunities [3] Product Development and Market Expansion - SMCI is entering the client-edge consumer AI markets, leveraging its expertise in AI-optimized servers and energy-efficient designs to offer competitive solutions for PCs and edge AI applications [5] - The company has introduced a diverse AI portfolio, including products like Super AI Station and Supermicro Edge AI Systems, aimed at challenging existing market players [5] Competitive Landscape - SMCI competes with major players like Dell Technologies and Hewlett Packard Enterprise in the AI-based server market, both of which have established customer bases and product offerings [6] - In the rack scale server domain, Dell and HPE provide advanced solutions that cater to high GPU density and thermal management needs [7][8] Valuation and Earnings Estimates - SMCI's shares have decreased by 37.6% over the past six months, contrasting with the 113% growth of the Zacks Computer – Storage Devices industry [9] - The company trades at a forward price-to-sales ratio of 0.47, significantly lower than the industry average of 2.25 [13] - The Zacks Consensus Estimate for SMCI's fiscal 2026 and 2027 earnings indicates a year-over-year increase of approximately 4.85% and 37.9%, respectively, with estimates remaining stable over the past 30 days [15]

Core Insights - Super Micro Computer (SMCI) is expanding its portfolio to provide AI-powered intelligent in-store retail solutions, aiming to upgrade traditional retail stores into intelligent environments [1] Group 1: AI Infrastructure and Partnerships - SMCI's retail-centric AI infrastructure integrates NVIDIA-accelerated computing and collaborates with ecosystem partners like Everseen, Wobot AI, and LiveX AI to enhance brick-and-mortar retail competitiveness against e-commerce platforms [2] - The partnership with Everseen focuses on computer-vision applications for shrink reduction and checkout efficiency, while Wobot AI offers video-based analytics to derive operational insights from existing CCTV feeds [3] - LiveX AI facilitates the deployment of in-store AI agents to improve customer interactions, and Superb AI enhances video analytics for interpreting shopper behavior [4] Group 2: Operational Efficiency and Revenue Projections - SMCI's retail AI infrastructure is designed for sub-second, edge-based processing in challenging environments, which is expected to enhance operational efficiency and return on investment [5] - The company projects revenues to reach $36 billion by fiscal 2026, indicating a strong growth trajectory [5] Group 3: Competitive Landscape - SMCI competes with Dell Technologies and Hewlett Packard Enterprise in the Edge AI space, both of which are significant suppliers of servers and storage systems [6] - Hewlett Packard Enterprise offers its Proliant series for various sectors, while Dell Technologies provides solutions like PowerEdge XR7620 Edge Server [7] Group 4: Stock Performance and Valuation - SMCI's shares have decreased by 46.8% over the past six months, contrasting with the Zacks Computer – Storage Devices industry's growth of 91.7% [8] - The company trades at a forward price-to-sales ratio of 0.41, significantly lower than the industry's average of 2.15 [11] - The Zacks Consensus Estimate for SMCI's fiscal 2026 earnings suggests a year-over-year increase of approximately 2.43%, with a more substantial increase of 41.78% projected for fiscal 2027 [12]

Core Insights - Super Micro Computer (SMCI) shares have decreased by 44.9% over the past three months, significantly underperforming the Zacks Computer-Storage Devices industry and the Zacks Computer and Technology sector, which appreciated by 25.4% and 4.5% respectively [1][8] - The current forward price-to-earnings (P/E) ratio for SMCI is 14.03, which is below the industry average of 20.86, indicating that the stock may be undervalued [4] - SMCI is targeting AI-led growth with a revenue goal of $36 billion, focusing on high-margin server products and Data Center Building Block Solutions (DCBBS) [8][19] Financial Performance - In the first quarter of fiscal 2026, SMCI's revenues and earnings fell by 15.5% and 56% respectively, attributed to a revenue shift due to last-minute customer configuration upgrades [13] - The company reported negative free cash flow of $950 million for the first quarter of fiscal 2026, exacerbated by higher receivables from new deals with larger customers [10][12] - SMCI's gross margins have been contracting for nine consecutive quarters, driven by competitive pricing strategies and increased manufacturing costs [9] Operational Challenges - SMCI is facing inventory accumulation, with first-quarter fiscal 2026 closing inventory rising to $5.7 billion from $4.7 billion in the previous quarter, leading to an increase in the cash conversion cycle from 96 days to 123 days [12] - The company is experiencing working capital issues due to the operational scale-up needed to meet unprecedented AI rack demand, planning to roll out 6,000 racks per month [11] Growth Opportunities - SMCI's high-performance servers are gaining traction in AI data centers and partnerships with vendors like NVIDIA and AMD are enhancing its market position [15] - The DCBBS solution is expected to achieve over 20% margins and become a significant long-term profit contributor [16] - SMCI is expanding into Client, Edge, and Consumer AI markets, unveiling a broad AI portfolio to compete with established players like HP, Dell, and Lenovo [17][18]

Core Insights - Super Micro Computer (SMCI) is positioned to achieve $36 billion in revenues by fiscal 2026, reflecting a significant 64% year-over-year growth driven by its rack-scale compute architecture for AI applications [1] Group 1: Product Offerings and Market Position - The company is leveraging its expertise in AI-optimized servers and energy-efficient designs to provide compact solutions for PCs, edge AI, and embedded applications, unveiling a comprehensive AI portfolio [2] - SMCI's Super AI Station, featuring the NVIDIA GB300 Grace Blackwell Ultra Desktop superchip, offers five times the AI PFLOPS computing power compared to traditional PCs, enhancing memory coherence, reducing latency, and improving data security for on-prem AI development [3] - The Supermicro SYS-542T-2R targets agentic AI and media workloads, while AMD-powered AI PCs facilitate local AI applications in office environments [4] - SMCI aims to disrupt the AI PC market, which is projected to grow at a CAGR of 19.1% and reach $91.2 billion by 2030 [5] Group 2: Competitive Landscape - Competitors Dell Technologies and HP Inc. have already entered the AI PC market, holding market shares of 13.3% and 19.8% respectively in the global PC market [6] - HP's range of AI-based computing devices and Dell's AI-capable workstations are expected to drive their top-line growth, posing a challenge to SMCI's market entry [7] Group 3: Financial Performance and Valuation - SMCI shares have decreased by 40.6% over the past six months, contrasting with a 72.7% appreciation in the Zacks Computer-Storage Devices industry [8] - The company trades at a forward price-to-sales ratio of 0.44X, significantly lower than the industry's average of 1.94X, indicating potential undervaluation [12] - The Zacks Consensus Estimate for SMCI's fiscal 2026 earnings suggests a year-over-year growth of 2.43%, with a more optimistic 41.78% growth projected for fiscal 2027 [15]

Core Insights - Super Micro Computer (SMCI) is increasing its internal power capacity to 52 megawatts and aims to scale its rack capacity to 6,000 racks per month, including 3,000 direct liquid cooling racks, to meet rising demand for AI and HPC workloads [1][10] Company Overview - SMCI provides rack-scale compute architecture for large-scale AI training, enterprise AI inference, visualization, content delivery, and AI edge applications, utilizing advanced NVIDIA technologies [2] - The company is establishing new facilities in the United States, Taiwan, Malaysia, the Netherlands, and the Middle East specifically for rack-level production, which is a key component of its data center building block strategy [3] Financial Performance - Despite the increasing demand for rack-scale products, SMCI experienced a revenue decline in the first quarter of fiscal 2026 due to shipment delays caused by a custom rack platform upgrade [4] - The company has nearly tripled its revenues over the past two years, with the Zacks Consensus Estimate for fiscal 2026 revenues projected at $36.5 billion, reflecting a year-over-year growth of 66% [5][10] Competitive Landscape - SMCI competes with Dell Technologies and Hewlett Packard Enterprise in the AI and data center market, both of which are significant suppliers of servers and storage systems [6] - Dell offers solutions like the Integrated Rack 5000 and 7000 Series, while Hewlett Packard Enterprise provides the ProLiant series [7] Valuation Metrics - SMCI's shares have decreased by 34% over the past six months, contrasting with a 65.9% growth in the Zacks Computer – Storage Devices industry [8] - The company trades at a forward price-to-sales ratio of 0.46, which is lower than the industry average of 1.81 [11] Earnings Estimates - The Zacks Consensus Estimate for SMCI's earnings in fiscal 2026 and 2027 indicates a year-over-year increase of approximately 3.58% and 41.5%, respectively, although estimates for fiscal 2026 earnings have been revised downward recently [13]

Core Viewpoint - Western Digital (WDC) shares have experienced a notable increase, attributed to cyclical recovery and strong demand for AI-related storage solutions, which is expected to support the stock's upward trend [2][3]. Group 1: Stock Performance - WDC shares ended the last trading session at $181.08, reflecting a 3.5% increase, with a 24.8% gain over the past four weeks [1]. - The stock's recent performance is supported by impressive trading volume, indicating strong investor interest [1]. Group 2: Demand and Pricing Power - The demand for high-capacity HDDs is significantly boosted by the rapid buildout of AI infrastructure, where Western Digital has a strong market presence [3]. - The company is benefiting from improved pricing power and margins due to a more rational supply environment with fewer major HDD suppliers [3]. Group 3: Earnings Expectations - Western Digital is expected to report quarterly earnings of $1.92 per share, representing an 8.5% year-over-year increase, while revenues are projected to be $2.91 billion, down 32% from the previous year [4]. - The consensus EPS estimate for the quarter has remained unchanged over the last 30 days, indicating stability in earnings expectations [6]. Group 4: Industry Context - Western Digital is part of the Zacks Computer-Storage Devices industry, which includes other companies like Quantum Corp. (QMCO), currently holding a Zacks Rank of 3 (Hold) [7][8].