In this podcast, Motley Fool analysts Tom King and Tim Beyers and contributor Travis Hoium discuss:
- How losing faith with auditors cost Supermicro.
- Whether fashion trends favor Lululemon.
- The 2026 challenges facing Nike CEO Elliott Hill.
To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. When you're ready to invest, check out this top 10 list of stocks to buy.
A full transcript is below.
This podcast was recorded on Dec. 29, 2025.
Tim Beyers: Can these three losers become winners in 2026? You're listening to Motley Fool Money. Welcome Fools. I'm your host, Tim Beyers, and with me are two of my Fool colleagues, Travis Hoium, Tom King. Travis, I'm emphasizing it because you haven't been on with me. Usually, it's you hosting.
Travis Hoium: Yeah. I'm sitting in a new seat here. I like putting the pressure on you.
Tim Beyers: I appreciate that. Friends, we're here to review some big losers from 2025. Super Micro Computer, ticker SMCI, Lululemon, ticker LULU, and Nike, ticker NKE. They were on decaf this year, friends, inflicting dreadful returns on those who've held. Today, we're going to talk through each of these companies and then make a prediction about whether they can turn it around in the new year. If so, what will winning look like? If you are ready to dive in, Tom, we're going to start with Super Micro Computer. For those who do not know, Super Micro Computer is like a reseller. They make servers, and those servers are customized by Super Micro. They have big relationships with NVIDIA. They have relationships with AMD. They build the chips, and then they build the motherboards, and they customize these things for big customers, particularly big data center customers. They have really close relationships with these suppliers, particularly with the chipset suppliers. That had been really good business, Tom. But in 2025, the Big Boogie man was Ernst & Young. You may have seen this. This was late 2024, early 2025, Ernst & Young said, and I'm quoting here, Jem and I pulled this from some of their accounting statements, "Unwilling to be associated with the financial statements prepared by management for Super Micro." I'm going to say that's not good. It's not really good, Tom. If we look at this, margins were compressed. There was some real hits to free cash flow, lot of notable pressure from competitors like Dell and Hewlett Packard Enterprise. When you look at this company, what do you think? Do you see a company that is primed for a turnaround or one that has been whacked so badly that it's going to take them a while to get off their knees?
Tom King: I would go on the side of caution with this one in 2026. I would say it's probably going to be an underperformer, or at least the risk of a significant meltdown is high. The reason I say that is because until the end of 2023, this was a pretty conservatively run business. They're inventory. As you mentioned, they mostly acquire built inventory and sell it to Big Data Center clients. They were acquiring that inventory through their regular profits that they had earned through operations. But at the beginning of 2024, they started taking on a significant amount of debt. Since then, they've borrowed $4.4 billion, which is a significant amount of money for them. They've increased their inventory. They've used that money to build and buy inventory. They increased it by 3.3 billion. This is a strategy that could work out well if they manage to sell that inventory at a decent price. But if there's a problem, if this AI boom slows down, they can't sell that inventory, it could become a significant problem for them.
Travis Hoium: Yeah, Tim, look, I'm in my 30th year now investing, and one of the things that I have learned is that if the accountants don't believe the numbers, we shouldn't necessarily believe the numbers or management in general. That is just a good reason to stay out of the stock. The other thing is this was an AI play before a lot of these other companies went crazy. You look at the ChatGPT moment, it was actually Super Micro that went nuts before NVIDIA did. Things have really gone South from them from there from an operating perspective. The revenue is trending in the wrong direction, exactly at the time when you think it should be rising. Something just doesn't smell right here. Maybe it's me being a little bit ignorant about the business and the ins and outs of exactly where they have an advantage and where they don't. I just think there's easier ways to play artificial intelligence, something as simple as Alphabet, just by the leader at a reasonable multiple, you don't have to bet on these comeback stories because I just don't think 2026 is going to be the year for Super Micro.
Tim Beyers: Well, if we're wrong, and I like that you both went thumbs down on this because we're getting some early consensus here. But if we're wrong, I'll just mention this for the listeners here. There is the potential of an NVIDIA tailwind here. Super Micro has said that they have a backlog of $36 billion in revenue booked for or maybe not booked, but what they expect for fiscal 2026, and that is supported by 13 billion just for the NVIDIA Blackwell Ultra systems. So if they execute this, there might be some deep value opportunity here. But yeah, I like the way you put this, Travis. When the auditors say no, maybe you want to pay attention. Up next, we're going to talk about yoga pants. It's Lululemon. You're listening to Motley Fool Money.
Fools, another of the big losers from 2025 was Lululemon, and if I give you some data here, Travis, so Lululemon underperformed the market. This is, as of our recording today, we're pre-recording on December 17 for our December 29 show. So we're trying to get a little bit ahead for respect everybody's holiday breaks. But as of today, Travis, Lululemon stock is trailing the market by about 60%, year to date. It has been a difficult 2025. It does look like a couple of things are at work here. Inventory issues. Maybe the inventory has been a little bit stale, 5% decline in America's comps. That same store sales down in Q3 of 2025. The breeze through products have not worked very well, and there may be some market share pressure here. When you think about Lululemon, Travis, where are you at? Do you think this is maybe a blip and you want to back this for 2026, or do you think there's maybe some deeper issues here?
Travis Hoium: I hate to be the negative Nelli because it looks like a value. If you look at their price earnings multiple and a trailing basis is 14, forward basis 17. That looks pretty good, especially if they're continuing to grow. They've had some tailwinds in Asia. The problem with fashion and brands like this is it's really hard to stay on top. You've got companies like Nike. We'll talk about them in a bit. They stayed on top for, what, 30, 40 years. That is not typically the way that things work. What I worry about with Lululemon is they rode this yoga wave for 20 years or so. Now you're looking at, where is the momentum? It's more with brands like HOKA and On. That's where the growth is. If you look at where the excitement is not only with athletes, it's not necessarily about going to yoga class. It's about going to a workout. It's going for a run. It isn't just about the fashion. It isn't just about yoga. It's about what are people doing? The things that are popular, even from a workout perspective, don't stay popular forever. If there was a pickleball brand, maybe that would be the hottest brand in the market that I would want to buy. But right now, I think stocks like Deckers Outdoor, which owns HOKA, are a little more attractive. Lululemon, I just worry that this is going to be a value trap for a long time for investors. That's an interesting point. Tom, I'm curious to know where you land on this. Travis says, "Not likely to be a market beater in 2026 here." I'll tee you up with this. Maybe CEO Calvin McDonald has his own doubts because he's going to be gone at the end of January. He has announced that he's on his way. I wonder maybe if some of the tariffs and macro pressures here are weighing on him a little bit. Where do you see things going for Lululemon, particularly with respect to things like guidance cuts? It hasn't been great.
Tom King: Yeah. I think people will enjoy this because I disagree with Travis. We've got an opposite view on this.
Travis Hoium: Like it, go for it.
Tom King: The last apparel company that melted down was Under Armour, and it melted down from my view, for two reasons. The first was an accounting scandal. It had gone from 20% growth every quarter for around about 5, 6, 7 years or something. Then an accounting scandal revealed that they had been encouraging retailers to order early so that Under Armour could book the sales and keep up that 20% streak. When that was revealed, it rarely set off a chain of events for Under Armour. Also on the operational side, in terms of selling their gear, they started selling it in off-price channels just to try and get their inventory out the door. I think that really damaged the brand. Neither of those two things has happened with Lululemon. The cycle has turned against them. People are stretched in the United States. They can't justify spending 130 bucks on yoga pants. I think that eventually that will change. I think that Lululemon hasn't lost its brand. I know that people's tastes change over time. I don't know what the future looks like in that respect, but I think it's a company that has that brand. It has maintained its strategy. It's made a few mistakes. The CEO is leaving. I don't know if that may have just been due to pressure from the founder, and there's a man who owns 7% of the company. He could have encouraged him to leave and said, "Look, we need some fresh perspective and ideas in this company. Maybe something like that, it's hard to speculate. But I don't know if 2026 will be the year that Lululemon comes back, but I definitely have faith in it as a good investment over, let's say, 3-5 years.
Tim Beyers: A plus one for the Rule Breaker in Lululemon. We've got Tom saying, "Yes, it's a market beater." Travis is saying no. Up next, we're staying in the fashion lane. We're going to talk about Nike. You're listening to Motley Fool Money. Fools, we close our segment on the three big losers of 2025. Can Nike be the winner? Tom, I'm going to come to you on this. We have a new CEO. We talked about outgoing CEO Calvin McDonald, Lululemon. We have an inbound CEO, really a returning executive at Nike in Elliott Hill. He has inherited, I think it's fair to say, a bit of a mess here. We've seen some revenue declines. We've seen lower market share. We talked a little bit about the pressure on Lululemon. I think there's a lot of pressure on Nike. You've seen a lot of high performance from On, from HOKA. The king of the running shoe maybe is no longer the king of the running shoe. Tom, talk to me about Nike and what you see here for a company that underperformed the market by about 25% year to date. Are they on track to be an outperformer in 2026?
Tom King: I think that Nike is a little bit lost right now. The reason I say this is because around about 3, 4, 5 years ago, they began a strategy of withdrawing from their wholesale customers, so they were no longer selling to big shoe retailers like footlocker and so on, design a shoe warehouse. They said that what they wanted to do was basically to copy the Lululemon model and control their brand better. They just wanted to sell it through their own websites or through Nike dedicated stores or through Nike dedicated sections within certain types of shoe stores. That strategy hasn't worked out that well for them, and now they're trying to reverse it and go back to those big retailers again. But in the meantime, these upstart brands like Hoka and On have taken that shelf space, and I think that Nike is now coming back to these retailers cap in hand and saying, "Hey, can we please have some shelf space back? Until they figure that out, until they figure out how they're going to sell their shoes, I would avoid Nike, and I don't think it's a winner in 2026.
Tim Beyers: Travis is begging work. Can we have our shelf space back? It is an interesting point, and to be fair Elliott Hill did say I mean, he's been honest with investors, I think, on balance, saying that the turnaround will take a while, even though the strategy is, and I'm quoting here, to win now. What does winning now look like here, Travis? Where are you at with Nike?
Travis Hoium: Any growth would be a win, I think, at this point. But the challenge for Nike is you want to have companies that are playing from a position of strength, and they're playing from a position of weakness right now. The way that I look at these companies strategically. Thomas talked about it a little bit with these newer brands coming in, but the big picture is that Nike grew up in a world where supply owned the market. They could sign a huge deal with Michael Jordan with Tiger Woods. They could put him on TV, put him in magazines. That was how you got attention to brands, and then you walked into a store like a ****'s, like a Footlocker, and you went, "Oh, I've seen those Nike shoes. I've seen those Jordan brand shoes before." That's how the market worked. In the world where HOKA and On are growing up, the market works very differently. You advertise on Instagram. You have Google Ads. You are more direct to consumer. That's what Nike saw as, "Oh, you know what? We want a piece of that, too." They gave up their golden goose. The problem is the companies that have grown up Internet native and being able to advertise in this new environment have grown in that space, and now they're starting to take Nike's space. I think Nike their future looks a lot more like Under Armour than it does like an on holding. That's really a damning thing to say, but the stock isn't even all that attractive right now, 35 times earnings, even on a forward basis, 35 times earnings. Enterprise value to sales, which doesn't account for profitability and margins and things like that, but that's 2.2, you can buy on holding, which is growing 40% over the past three years for 4.3 times sales. Less than double the price on a price-to-sales multiple. They're not focused on profitability quite yet, but they have 60% margins. Nike's much lower than that. Again, this really comes back to they are in a tough position because they grew up in a world where supply owned the shelf space. That was what mattered. We have seen companies like Budweiser, like Procter & Gamble. When you lose that power position, when the market changes, you are just fundamentally not structured to adapt. That's what I worry about with Nike.
Tim Beyers: Quick question for both of you, and we'll end on this. Give me a yes or no, Tom, you first. If there is tariff relief because Nike, like a lot of other consumer brands, has been hit by the tariffs, if there is significant tariff relief, does your opinion change, yes or no, Tom?
Tom King: No, I don't think the tariff relief will be enough.
Tim Beyers: Travis.
Travis Hoium: No.
Tim Beyers: There you have it. To thumbs down for Nike. Fools, this has been part of our series of year-end, looking back to look forward to 2026. Thank you for tuning in with us. Tom, Travis, thanks for being here. Really appreciate it. Fools, as always, people on the program may have interest in the stocks they talk about, and the Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. All personal finance content follows Motley Fool editorial standards and not approved by advertisers. Advertisements are sponsored content provided for informational purposes only. You see our Fool advertising disclosure. Please check out our show notes. Fools, we're so glad you're here. We hope you're having a wonderful holiday season. Our engineer, as always, is Dan Boyd, and our producer is Anand Chokkavelu. Thanks to Tom King, Travis Hoium for being here with me. I am your host, Tim Beyers. We will see you again in 2026. Fools, thank you for tuning in. Fool on.
