Super Micro Computer (SMCI) wrapped up fiscal 2026 on a strong footing, with its revenue and earnings increasing significantly. Moreover, SMCI continues to see robust demand for its Artificial intelligence (AI) and IT infrastructure solutions, while its record backlog points to continued business momentum and potentially strong growth in the periods ahead.
While Super Micro Computer is expected to deliver solid growth, its stock looks attractive on valuation, suggesting now could be the right time to buy.
Super Micro to Maintain Strong Growth Trajectory in FY27
Super Micro Computer exited fiscal 2026 with robust growth, and the company appears well positioned to extend this momentum into FY27. In FY26, revenue reached $39.1 billion, up 78% from $22 billion in FY25. Adjusted earnings per share rose 76% year-over-year (YoY), from $2.06 to $3.63.
AI remains the primary catalyst for the company's revenue expansion. Supported by its substantial backlog, management expects AI-related solutions to contribute more than 80% of revenue over the next several quarters. At the same time, demand from enterprise and channel customers is strengthening as these customers modernize their compute, storage, and networking infrastructure, including the adoption of more efficient CPU-based platforms.
The enterprise and channel business grew strongly in Q4. Revenue from this customer group reached $5.6 billion, accounting for 50% of quarterly revenue versus 28% in the preceding quarter. This represented a 172% YoY increase and a 98% sequential gain.
Revenue from OEM appliances and large data center customers totaled $5.5 billion during Q4, also accounting for 50% of quarterly revenue, compared with 72% in the previous quarter. The segment grew 50% YoY.
Super Micro also ended FY26 with a record backlog. The company secured more than $60 billion in new orders during Q4 FY26, providing a substantial pipeline of business to be delivered over the coming quarters.
SMCI's customer base is diversifying. During FY26, Super Micro had nine customers generating over $1 billion in annual revenue, compared with only four in FY25. This broader customer base should support sustained growth as demand for AI infrastructure continues to expand.
Focused on Margin Expansion
While Super Micro Computer's revenue growth is expected to remain healthy, the company is also focused on improving margins and profitability. In Q4 FY26, SMCI reported an adjusted gross margin of 17.6%, compared with 10.1% in Q3, representing a sequential improvement of approximately 750 basis points. The increase was primarily attributable to a more favorable customer and product mix.
While the exceptionally high Q4 margin level is unlikely to be sustained, Supermicro is implementing several initiatives to expand margins going forward.
SMCI's rapidly expanding portfolio of inference and Agentic AI-focused solutions is contributing to a more attractive profitability mix. Another important opportunity lies in its Data Center Building Block Solutions (DCBBS). As adoption increases, these integrated solutions are expected to become a more meaningful contributor to the company's overall earnings.
Operational efficiency is also a key part of Supermicro's margin expansion strategy. The company is working to improve manufacturing yields through greater factory automation, design optimization, and the flexibility provided by its building-block architecture. Supermicro is also broadening its enterprise customer base while positioning itself to benefit from the shift toward Agentic AI and specialized AI workloads.
Overall, SMCI is expanding its enterprise customer base, improving customer and product mix, increasing adoption of DCBBS solutions, and strengthening operational efficiency, which will likely support margins going forward.
SMCI Stock Appears Undervalued
Super Micro Computer is well positioned for continued earnings growth and remains undervalued.
SMCI is trading at approximately 9.5 times forward earnings, a valuation that looks compelling given analysts' expectations for EPS growth of 23.9% in FY27 and 21.3% in FY28.
SMCI stock also trades at a significant discount to larger industry peers. By comparison, Dell Technologies (DELL) and Hewlett Packard Enterprise (HPE) currently carry forward P/E multiples of 25.8x and 18.7x, respectively.
The valuation gap is also evident in price-to-sales (P/S). SMCI's 0.59x P/S ratio is significantly lower than those of its peers, highlighting the stock's relatively inexpensive valuation.
With strong projected earnings growth and a comparatively low valuation, SMCI stock has room for further upside.
The Bottom Line
Super Micro Computer enters FY27 with strong business momentum, supported by robust AI infrastructure demand, a record backlog, and a broader customer base.
While analysts maintain a "Hold" consensus rating as the industry remains highly competitive, SMCI stock trades at a substantial discount to larger peers, despite expectations for double-digit EPS growth. This offers an attractive buying opportunity.
On the date of publication, Sneha Nahata did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
Facts Only
* Super Micro Computer exited fiscal 2026 with revenue of $39.1 billion, up 78% from $22 billion in FY25.
* Adjusted earnings per share rose 76% year-over-year (YoY), from $2.06 to $3.63.
* AI solutions are the primary catalyst for revenue expansion.
* Management expects AI-related solutions to contribute more than 80% of revenue over the next several quarters, supported by the backlog.
* Revenue from enterprise and channel customers reached $5.6 billion in Q4 FY26, representing 50% of quarterly revenue.
* Revenue from OEM appliances and large data center customers totaled $5.5 billion in Q4 FY26, representing 50% of quarterly revenue.
* The enterprise and channel business grew 172% YoY and achieved a 98% sequential gain in Q4.
* Revenue from OEM appliances and large data center customers grew 50% YoY in Q4.
* Super Micro secured more than $60 billion in new orders during Q4 FY26.
* SMCI reported an adjusted gross margin of 17.6% in Q4 FY26, compared to 10.1% in Q3 FY26.
* FY26 revenue was $39.1 billion, compared to $22 billion in FY25.
* SMCI trades at approximately 9.5 times forward earnings.
Executive Summary
Full Take
The narrative centers on a transition point where high-growth infrastructure demand is meeting operational maturity, creating an opportunity for value appreciation based on perceived undervaluation and margin improvement. The pattern observed is the reliance on a single dominant growth vector—AI—to justify current valuations, suggesting that future sustained growth hinges less on raw capacity expansion and more on the successful monetization of specialized solutions like Agentic AI and Data Center Building Block Solutions (DCBBS). The attempt to pivot towards margin expansion through product mix refinement and operational efficiency signals an awareness that pure volume growth is insufficient for premium valuation.
The assumption underlying the stock's attractiveness is the market's ability to price in future AI-driven revenue streams, discounted against peers whose valuations reflect broader, less specialized infrastructure exposure. The historical pattern suggests that when a company successfully shifts its offering from commoditized hardware assembly toward proprietary, high-margin software and integrated solutions (like DCBBS), valuation multiples will naturally expand beyond those of legacy hardware providers. The critical question for resilience is whether the announced margin expansion strategies and customer diversification efforts can translate into sustained superior execution, or if the market will revert to valuing the company solely on the headline AI demand without rewarding the operational improvements.
What evidence exists demonstrating that the margin expansion initiatives are structurally sustainable beyond the current Q4 improvement? How much of the future growth is truly attributable to proprietary architecture versus external market forces? If the focus shifts from simple revenue multiples to the embedded value of optimized, specialized AI infrastructure solutions, how does this change the risk/reward calculation for investors seeking long-term stability versus high volatility based on the current valuation gap?
Sentinel — Human
This text reads like a synthesized investment summary, effectively combining hard financial statistics with forward-looking strategic commentary, suggesting human curation of raw data.