Super Micro Computer (SMCI) has reported significant advancements in its operations during the first quarter of fiscal 2026, announcing an increase in internal power capacity to 52 megawatts. Additionally, the company is on track to ramp up its rack capacity to 6,000 racks per month, including 3,000 direct liquid cooling racks, to meet the growing demand for products designed to support artificial intelligence (AI) and high-performance computing (HPC) workloads.
SMCI’s rack-scale compute architecture is tailored for various applications, including large-scale AI training, enterprise AI inference, visualization, content delivery, and AI edge processes. The offerings include cutting-edge systems equipped with NVIDIA HGX B200 8-GPU systems, NVIDIA GB200 Grace Blackwell SuperChip, and nodes utilizing NVIDIA H100 NVL and H200 NVL GPUs.
The company is also expanding its manufacturing capabilities with new facilities in the United States, Taiwan, Malaysia, the Netherlands, and the Middle East. These facilities are specifically designed for rack-level production rather than merely server assembly, reflecting SMCI’s strategy to integrate rack-scale plug-and-play servers into its broader data center building block (DCBBS) framework.
However, this pivot toward rack-scale deployment has introduced some challenges. The company has faced increased costs and lower margins while scaling its new mega-scale GB300 optimized rack platform. This shift has contributed to revenue declines reported for the first quarter of fiscal 2026, primarily due to delays in shipments that have been pushed to the second quarter as a result of a custom rack platform upgrade.
Despite these hurdles, demand for SMCI’s rack-scale products appears robust. The company has achieved a remarkable revenue growth trajectory, tripling its revenues in the past two years. For fiscal 2026, analysts project revenues to reach approximately $36.5 billion, reflecting a year-over-year increase of 66%, according to the Zacks Consensus Estimate.
In a competitive landscape, SMCI finds itself up against major players such as Dell Technologies (DELL) and Hewlett Packard Enterprise (HPE) within the AI and data center market. Both competitors serve a diverse customer base, including enterprises and cloud providers, and offer their own solutions in the rack scale server domain. Dell’s Integrated Rack 5000 Series focuses on high GPU density with advanced thermal management, while its Integrated Rack 7000 Series adheres to 21-inch open compute project standards to support multiple generations of CPUs and GPUs. Meanwhile, HPE provides a range of options within its ProLiant series.
Shares of Super Micro Computer have experienced a notable decline, plummeting 34% over the past six months, in stark contrast to the Zacks Computer – Storage Devices industry, which has seen growth of 65.9% during the same period. From a valuation perspective, SMCI is trading at a forward price-to-sales ratio of 0.46, significantly below the industry average of 1.81, suggesting a potential undervaluation amid its current challenges.
Looking ahead, the Zacks Consensus Estimate projects SMCI’s earnings for fiscal 2026 to rise approximately 3.58% year over year, with an even more optimistic outlook of 41.5% growth anticipated for fiscal 2027. However, estimates for fiscal 2026 earnings have been revised downward in recent weeks, reflecting ongoing uncertainties in the market.
Currently holding a Zacks Rank #3 (Hold), Super Micro Computer continues to navigate the complexities of the evolving tech landscape while positioning itself for future growth in the highly competitive AI and data center sectors.
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