Super Micro Computer, Inc. SMCI has been on a remarkable run, surging 38.3% year to date. The stock has outperformed the Zacks Computer – Storage Devices industry and its peers, including Pure Storage PSTG and Western Digital WDC.

YTD Price Return Performance

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This outperformance was driven by Super Micro Computer’s ambitious growth outlook, expanding artificial intelligence (AI) partnerships and successful navigation of financial reporting challenges. The company’s bullish forecast of reaching $40 billion in annual sales by fiscal 2026, combined with its leadership in providing AI-optimized server solutions, makes the stock an attractive long-term investment.

Despite its recent surge, Super Micro Computer’s robust fundamentals and dominant position in the AI-driven data center market suggest the stock still holds substantial upside potential.

SMCI’s Ambitious Growth Targets Signal Long-Term Upside

Super Micro Computer’s forecast of achieving $40 billion in annual sales by fiscal 2026 highlights its aggressive expansion plans and confidence in capturing rising AI infrastructure demand. This target represents more than a 168% increase from its fiscal 2024 net sales of $14.94 billion, signaling a clear path for accelerated revenue growth.

On its recent second-quarter fiscal 2025 earnings call, management reiterated that the company is well-positioned to meet this target by capitalizing on the explosive growth in AI workloads. With enterprises and cloud providers expanding their AI-driven data center capacity, the need for high-performance, energy-efficient servers is growing exponentially.

Super Micro Computer’s liquid-cooled server solutions are gaining traction as they address the power and thermal challenges associated with large-scale AI workloads. The company’s focus on modular and rack-scale solutions also enables customers to scale efficiently, driving repeat business and improving customer retention. This positioning makes Super Micro Computer a key beneficiary of the ongoing AI infrastructure expansion.

NVIDIA Partnership Strengthens SMCI’s AI Leadership

A key driver of Super Micro Computer’s long-term growth is its expanding collaboration with NVIDIA NVDA. The company’s servers are optimized for NVIDIA’s high-performance graphics processing units (GPUs), including the newly launched Blackwell platform. This platform is expected to power the next generation of AI clusters and hyperscale data centers, providing Super Micro Computer with a lucrative growth avenue.

By integrating NVIDIA’s cutting-edge AI hardware into its server solutions, Super Micro Computer strengthens its market position as a preferred infrastructure partner for AI deployments. The growing demand for large-scale AI clusters and AI factories is fueling increased orders, enhancing Super Micro’s revenue visibility. This strategic partnership is likely to remain a significant tailwind for the company, driving both top-line growth and market share expansion.

Meeting Filing Deadlines Restores Market Confidence in SMCI

Super Micro Computer’s recent surge was further supported by its successful filing of long-delayed financial reports, which removed a major overhang on the stock. The company submitted its fiscal 2024 10-K and 10-Q reports for the first quarter and second quarter of fiscal 2025 before the Feb. 25 NASDAQ delisting deadline, ensuring compliance with listing requirements.

By resolving its reporting delays, Super Micro Computer restored investor confidence and dispelled concerns over potential governance issues. This regulatory compliance also enables the company to refocus on its operational growth strategy without the distraction of delisting risks. The timely filing reflects management’s commitment to transparency and accountability, strengthening its credibility with the market.

SMCI’s Financial Performance Reflects Operational Strength

Super Micro Computer’s second-quarter fiscal 2025 business update highlighted its operational strength and growing market influence. The company’s preliminary results state revenues between $5.6 billion and $5.7 billion for the second quarter, representing a 54% year-over-year increase.

This robust top-line growth was driven by surging demand for its AI-optimized servers. Despite a competitive pricing environment, the company’s preliminary report suggests a non-GAAP EPS of 58-60 cents, a 5% year-over-year increase at the midpoint. This improved bottom-line performance reinforces the company’s ability to capitalize on robust AI demand, further boosting its earnings potential.

Technical Indicator Signals Bullish Trend for SMCI

Adding to the positives, the stock trades above the 50-day moving average at present, signaling a bullish trend for SMCI stock in the near term.

SMCI 50-Day SMA Signals Bullish Trend

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Conclusion: Buy SMCI Stock for Now

Super Micro Computer’s impressive YTD rally is backed by strong fundamentals, growing AI tailwinds and restored investor confidence. The company’s ambitious revenue target of $40 billion by fiscal 2026, combined with its strategic NVIDIA partnership and leadership in AI-optimized server solutions, makes it a compelling long-term investment.

Moreover, its successful financial reporting compliance removes a key overhang, paving the way for continued upside. With AI infrastructure spending expected to remain a multi-year growth driver, this Zacks Rank #2 (Buy) stock remains a lucrative investment option for investors seeking exposure to the booming AI data center market. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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