Many companies with the potential to be multimillionaire-makers for investors are fast-growing, cheap, and misunderstood. Super Micro Computer (SMCI +3.18%) is at least two of those things. But it will take some time before investors learn whether or not it's misunderstood today.
There's no question that Supermicro has grown fast. In its fiscal 2025 (which ended in June), net sales were up nearly 50% year over year, climbing to $22 billion. And the business earned a cool $1 billion in net income.
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For perspective, Supermicro generated revenue of about $3 billion just five years ago. Its hardware products are widely used in artificial intelligence (AI) data centers. And considering that entire industry is booming, Supermicro is experiencing its strongest demand ever.
It recently reported its fiscal first-quarter 2026 results, and the company had about $1.25 in trailing-12-month earnings per share (EPS). That means that it trades at about 27 times earnings. That's only slightly lower than the 28 times earnings that the S&P 500 averages. But the average S&P 500 company isn't growing this fast, which is why I call Supermicro stock "cheap."
SMCI PE Ratio data by YCharts.
Supermicro's guidance for the coming fiscal year looks promising. But investors aren't buying it, and the stock has fallen in recent months in consequence. Here's why.
Supermicro's big misunderstanding
Supermicro's management is saying that it will have full-year fiscal 2026 net sales of $36 billion. This would amount to top-line growth of at least 50%. But nobody is buying it because of how many times management has missed guidance.
For over a year now, Supermicro has underperformed quarterly financial expectations. It also got into trouble over its official financial paperwork, and management has revised expectations lower multiple times. Its fiscal Q1 revenue, reported in November, was again below management's guidance -- and was down 15% year over year.
NASDAQ: SMCI
Key Data Points
Management says that Supermicro's products are still in strong demand, but that a meaningful share of its orders shifted from fiscal Q1 into fiscal Q2. If this is true and the company indeed delivers $36 billion in fiscal 2026 revenue, then the stock is trading at roughly 0.6 times this year's sales. For a profitable business growing at 50%, this is incredibly inexpensive.
Supermicro stock could easily be worth 3 times its current value if it delivers on its promises and puts its string of earnings misses behind it. And if it grows 50% in the coming year, it would likely continue to put up strong growth for at least a couple of years thereafter. After all, growth rarely goes from 50% to 0% overnight.
In short, Supermicro stock could be a multibagger in short order, delivering strong returns for investors. Whether that makes it a multimillionaire-maker stock for investors would depend on how much one invests. A substantial investment could yield this type of gain.
I believe Supermicro will prove its doubters wrong -- its explanation of the timing shift for revenue seems reasonable to me. That said, I don't believe most investors should make large investments in Supermicro today because it's a risky stock. Investors are prudent to view management's current guidance with a pinch of skepticism, given its recent performance.
In conclusion, Supermicro stock could have a big payoff if one makes a big investment. But it would probably be best to keep any investment in it modest, just in case management continues to deliver underwhelming (relative to guidance) results this year.
