Core Insights - Super Micro Computer's (SMCI) Data Center Building Block Solutions (DCBBS) is poised for rapid growth driven by the AI wave and increasing IT infrastructure demand, enabling customers to scale quickly and reduce costs [1][10] Company Overview - SMCI's DCBBS technology integrates rack-scale, plug-and-play server architecture with advanced direct liquid cooling technology, optimized for AI and high-performance computing workloads, primarily utilizing NVIDIA Blackwell and AMD platforms [2] - The company anticipates significant market share growth across various AI infrastructure deployments, with DCBBS contributing 4% to profits, expected to rise to double digits by the end of 2026 [3] Product Development - Over the past year, SMCI has expanded its DCBBS product portfolio, launching several new products including CDU, L2A heat exchangers, and data center management software, with plans to produce 6,000 racks per month to achieve a $40 billion revenue target by fiscal 2026 [4] Financial Performance - SMCI's business is increasingly focused on AI, with AI GPU platforms accounting for over 90% of revenues; however, this strategy has led to inventory challenges, with inventory nearly doubling to $10.6 billion in Q2 fiscal 2026 [5][10] - The company trades at a forward price-to-sales ratio of 0.41, significantly lower than the industry average of 2.43 [11] Market Context - The AI data center market is projected to grow at a CAGR of 31.6% from 2025 to 2030, reaching a market size of $934 billion, with competitors like Hewlett Packard Enterprise and Dell Technologies actively participating in this space [6][7] Earnings Estimates - The Zacks Consensus Estimate for SMCI's fiscal 2026 and 2027 earnings indicates a year-over-year increase of approximately 7.77% and 33.62%, respectively, with recent upward revisions for fiscal 2026 estimates [14]

Core Insights - NVIDIA Corporation (NVDA) is experiencing strong quarter-over-quarter earnings, driven by high demand for its Blackwell chips, expanding AI partnerships, and increased data center investments, indicating long-term growth potential [1] - Despite this, NVIDIA's shares have only risen 1.8% year to date, underperforming compared to other AI companies like TSMC, Micron, and Supermicro, which have seen significant stock price increases [2] NVIDIA Corporation - NVIDIA's fiscal 2026 fourth quarter is expected to reflect continued strong performance due to relentless demand for its chips and AI-driven partnerships [1] Taiwan Semiconductor Manufacturing Company (TSMC) - TSMC is benefiting from rising data center demand, with expected revenues for Q1 2026 projected between $34.6 billion and $35.8 billion, marking a 25.5% year-over-year increase and a 1.9% quarter-over-quarter rise [5] - TSMC anticipates improved profit margins, projecting a gross margin of 63% to 65% for Q1 2026, up from 62.3% in Q4 2025, with an expected earnings growth rate of 53.8% for the current quarter [6] Micron Technology, Inc. - Micron is poised for solid growth due to increased demand for its high-bandwidth memory (HBM) chips, driven by data center operators and AI hyperscalers [7] - The company expects fiscal Q2 2026 revenues between $18.3 billion and $19.1 billion, up from $13.64 billion in Q1 2026, with projected earnings growth rates of 444.9% for the current quarter and 307.6% for the full year [8][9] Super Micro Computer, Inc. - Supermicro is set to benefit from rising AI hardware demand, with growing interest in its Data Center Building Block Solutions (DCBBS) among AI clients [10] - The company expects revenues for fiscal Q3 2026 to reach $12.3 billion, with full-year net sales projected to exceed $40 billion, and earnings growth rates of 103.2% for the current quarter and 7.8% for the full year [11]

For Immediate ReleasesChicago, IL – February 17, 2026 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include  NVIDIA Corporation (NVDA) , Super Micro Computer, Inc. (SMCI) , Advanced Micro Devices, Inc. (AMD) and Intel Corporation (INTC) .Here are highlights from Tuesday’s Analyst Blog:NVIDIA vs. SMCI: Which AI Hardware Stock ...

Core Viewpoint - NVIDIA Corporation (NVDA) is currently positioned as a stronger investment compared to Super Micro Computer, Inc. (SMCI) due to its superior profitability metrics and robust demand for its AI chips, despite both companies benefiting from the AI infrastructure boom [1][12]. Group 1: NVIDIA's Performance - NVIDIA's revenues surged 62% year over year and 22% sequentially to $57 billion in the fiscal third quarter of 2026, with expectations for the fiscal fourth quarter to reach nearly $65 billion, plus or minus 2% [2][8]. - The company's gross margin increased to 73.4% in fiscal third-quarter 2026 from 72.4% in the previous quarter, indicating strong profitability [6][8]. - NVIDIA's return on equity (ROE) stands at an impressive 99.2%, showcasing its effective management and profitability compared to competitors [7][8]. Group 2: Supermicro's Performance - Supermicro's fiscal second-quarter 2026 sales climbed 123% year over year to $12.7 billion, significantly exceeding analysts' expectations of $10.4 billion [3][4]. - However, Supermicro's gross margins fell to 6.3% in fiscal second-quarter 2026 from 11.8% in the same quarter last year, indicating challenges in profitability [6][10]. - The company has a debt-to-equity ratio of 66.9%, which is considerably higher than NVIDIA's 6.3%, suggesting greater financial risk [10]. Group 3: Market Dynamics - The thawing trade tensions between the United States and China are expected to support NVIDIA's sales, as the U.S. government has approved the shipment of NVIDIA's H200 AI chips to China [2]. - Supermicro is scaling its AI server and storage capabilities, with its Data Center Building Block Solutions (DCBBS) gaining traction among AI clients [4][5].

Core Viewpoint - Super Micro Computer reported strong revenue growth in its fiscal 2026 second quarter, leading to an initial rise in stock price, but the stock has experienced volatility throughout the week following the report [1]. Group 1: Company Overview - Supermicro designs and assembles servers and rack solutions for data centers, serving as a key partner to Nvidia by customizing systems around its GPUs [2]. Group 2: Financial Performance - In the fiscal second quarter, Supermicro's revenue more than doubled year over year to $12.7 billion, exceeding the analyst consensus estimate of $10.4 billion [5]. - Adjusted earnings per share (EPS) increased by 17% to $0.69, surpassing the consensus estimate of $0.49 [5]. Group 3: Gross Margin Analysis - Supermicro has faced significant gross margin pressure, with margins declining from 17% in June 2024 to a low of 6.3% in the most recent quarter [3]. - Management believes that gross margins have reached their lowest point and expects improvement, partly due to the adoption of higher-margin Data Center Building Block Solutions (DCBBS) [4]. Group 4: Future Outlook - Management projected fiscal third-quarter revenue of at least $12.3 billion and raised the full-year revenue outlook to at least $40 billion, up from a previous forecast of $36 billion [6]. - The company guided for fiscal Q3 adjusted EPS of at least $0.60 and a sequential rise in adjusted gross margin by 30 basis points [6]. Group 5: Market Context - Despite strong revenue growth, Supermicro's gross margins have been shrinking due to its intermediary position between Nvidia and cost-conscious customers, in a highly commoditized data center server market [7].

Core Viewpoint - Super Micro Computer, Inc. (NASDAQ: SMCI) is recognized as a significant player in the AI sector, despite Barclays lowering its price target to $38.00 from $43.00 while maintaining an "Equal Weight" rating [1]. Financial Performance - In the December quarter, Super Micro Computer reported revenue of $12.7 billion, marking a 153% increase quarter-over-quarter and exceeding Barclays' estimate by over $2 billion [2]. - The gross margin for the quarter was 6.4%, slightly below Barclays' estimate of 6.5% [3]. - Management forecasts fiscal third-quarter revenue to be at least $12.3 billion and has raised its full-year 2026 revenue guidance to at least $40 billion, aligning with analysts' expectations of 66% revenue growth for the fiscal year [3]. Future Outlook - Gross margin is expected to improve by 30 basis points quarter-over-quarter in the next quarter, although it will still remain below 7% [4]. - The Data Center Building Block Solutions (DCBBS) segment is anticipated to increase its contribution to profits [4]. - Barclays views the fiscal 2026 guidance as conservative, expecting momentum to continue through the second half of the year despite a projected sequential deceleration in the fourth quarter [4]. Company Overview - Super Micro Computer, Inc. designs and manufactures high-performance server and storage solutions for data centers, cloud computing, AI, and edge computing globally [5].

Core Insights - NVIDIA Corporation (NVDA) leads the artificial intelligence (AI) market but has a high valuation, trading at a forward price-to-earnings (P/E) ratio of 37.35, significantly above the industry average of 22.67, which may lead to volatility if growth expectations are not met [3] - Super Micro Computer, Inc. (SMCI) has shown strong quarterly performance with a 123% year-over-year increase in net sales to $12.7 billion, driven by its Data Center Building Block Solutions (DCBBS) gaining traction among AI customers [6][8] - SMCI's forward P/E ratio of 15.83 is below the Computer-Storage Devices industry's average of 28.9, indicating it may be undervalued [5] Company Performance - Supermicro's net sales for Q2 FY26 reached $12.7 billion, primarily due to the popularity of DCBBS, which offers integrated solutions for AI customers [8] - The company projects third-quarter fiscal 2026 revenues to be at least $12.3 billion and full-year net sales to reach at least $40 billion [9] Financial Metrics - Supermicro's gross margin decreased to 6.3% from 11.8% year-over-year, indicating potential challenges in maintaining profitability [11] - The debt-to-equity ratio for Supermicro stands at 66.9%, significantly higher than the industry average of 20.1%, suggesting increased financial risk [13]

Core Insights - Super Micro Computer (SMCI) is expected to report its second-quarter fiscal 2026 results on February 3, 2026, with a focus on its server and storage business driven by AI server demand and NVIDIA GPU platforms [1] Group 1: AI Infrastructure Demand - SMCI has increased its internal power capacity to 52 megawatts and aims to scale up its rack capacity to 6,000 racks per month, including 3,000 direct liquid cooling racks, to meet rising demand for AI and high-performance computing [2] - The company is projected to benefit from the growing demand for its NVIDIA-based chip integrated rack scale compute architecture for large-scale AI training and enterprise AI applications [3] Group 2: Server Business Recovery - SMCI's server and storage revenues grew by 50.2% year over year in fiscal 2025, but faced a slowdown in the first quarter of fiscal 2026 due to shipping delays and competitive pricing strategies [4] - The decline in server business is expected to be non-recurring, with a return to normalcy anticipated in the second quarter of fiscal 2026, supported by revenue shifts from earlier delays [5] Group 3: Revenue Projections and Market Expansion - The company projects revenues of $36 billion in fiscal 2026, indicating a significant 64% year-over-year growth [6] - SMCI is entering the client, edge, and consumer markets, leveraging its expertise in AI-optimized servers and energy-efficient designs to provide compact solutions for various applications [7] Group 4: Inventory and Operational Challenges - Rapid expansion has led to inventory accumulation, with first-quarter fiscal 2026 closing inventory rising to $5.7 billion from $4.7 billion, increasing the cash conversion cycle from 96 days to 123 days [8] - The company faces challenges related to customer concentration and higher receivables from mega deals, resulting in a negative free cash flow of $950 million for the first quarter of fiscal 2026 [10]

Core Insights - Super Micro Computer (SMCI) and Meta Platforms (META) are key players in the AI infrastructure supply chain, with SMCI focusing on high-performance servers and META acting as a hyperscale consumer of AI compute [1][2] Group 1: SMCI Overview - SMCI provides end-to-end AI rack-scale systems that integrate compute, networking, storage, and liquid cooling for AI data centers, utilizing advanced chips from NVIDIA and AMD [3] - The company has introduced Data Center Building Block Solutions (DCBBS) to facilitate rapid scaling for AI data centers, which is gaining traction [4] - SMCI is expanding its production facilities globally, diversifying into client, edge, and consumer AI markets, and aims for $36 billion in revenues by fiscal 2026, reflecting a 64% year-over-year growth [5][6] Group 2: SMCI Challenges - Rapid expansion has led to inventory accumulation, with first-quarter fiscal 2026 closing inventory at $5.7 billion, up from $4.7 billion, and a cash conversion cycle increase from 96 days to 123 days [7] - The company reported negative free cash flow of $950 million for the first quarter of fiscal 2026, with earnings growth estimates revised downward [7][8] Group 3: META Overview - META is heavily investing in AI infrastructure, including custom chips and large clusters to support its applications, with 79% of its total expenses in 2024 directed towards data centers and technical infrastructure [9][10] - The company is developing custom chips for AI workloads and consolidating smaller models into larger, more efficient ones, with significant capital expenditures projected between $70-$72 billion for 2025 [11][12] Group 4: META Growth Projections - META's AI scaling efforts include the development of a one-gigawatt Prometheus cluster and a five-gigawatt Hyperion cluster expected to launch in 2028, with revenue and earnings growth estimates for 2026 at 18% and 31%, respectively [12] - Recent earnings estimates for META have been revised upward, indicating positive market sentiment [12] Group 5: Stock Performance and Valuation - Over the past six months, shares of SMCI and META have decreased by 37% and 14.3%, respectively [13] - SMCI is trading at a forward Price to Sales ratio of 0.46X, while META is at 6.42X, both below their historical medians [15] Group 6: Conclusion - SMCI is experiencing rapid growth driven by AI infrastructure demand but faces challenges with working capital intensity and negative cash flow [16] - META's long-term investments in AI infrastructure and improved technology position it favorably against SMCI, with both companies currently holding a Zacks Rank 3 (Hold) [16]

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]