As of May 2026. While giants of the industry of artificial intelligence time after time renew historical maximums, and investors are ready to buy their shares for any money, a real drama is unfolding in the market. In the center of attention — the company Super Micro Computer (SMCI), one of the key manufacturers of server racks and systems of liquid cooling for data centers.
From one side, before us is a phenomenal business-case, surging of the AI-revolution. From the other — a chart of shares, which looks so, as if the company stands on the threshold of bankruptcy. What exactly is before us: a fundamentally strong business, temporarily having fallen into a perfect storm, or a company, having overplayed itself into very dangerous games? Let us dismantle it.
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The figures scream buy me
If you will look exclusively on financial indicators and the market valuation of Super Micro, at you can arise a reasonable question: “Why I up until now did not put here all free money?”. Super Micro produces the physical foundation for AI — server racks. With the account of the global boom on the construction of data centers, the revenue of the company demonstrates a parabolic growth.
If in June 2023 the annual revenue constituted $7.1 billion, and in June 2024 — $14.9 billion, then by May 2026 the indicator for the last 12 months (TTM) surpassed, probably, an incredible $28 billion. The business grew in four times over just three years.
However, if we will look at net profit, then will see a drawdown: for the last 12 months it constituted $872.8 million, which is lower than the indicators of 2024 ($1.15 billion). Why at a two-time growth of revenue profit fell?
Fundamental boom and the Malaysian gambit
The answer lies in an aggressive strategy of the capture of the market. In 2024–2025 the company led into construction huge new capacities, including an advanced factory in Malaysia. To load these conveyors with orders and to not allow their downtime, the management went on a conscious step — a harsh price dumping. They sacrificed current margin (having decreased prices), to take away clients from competitors.
The main competitor like Dell did not begin to tie itself into this price war. Since they, in distinction from SMCI, do not produce racks fully themselves, but occupy themselves only by final assembly, and to them it is more important to preserve margin, and not to load factories.
And this strategy, it seems, worked. The factory in Malaysia exited onto full power. Clients are received, the share of the market is captured. And accounting, that the cost price of production in Asia is significantly lower, than in the USA, at Super Micro now there are all levers, to cease dumping and to begin to recover its margin, but already on significantly grown volumes.
Anomalous undervaluation
On the background of this brilliant strategic victory the market valuation of the company looks, perhaps, absurdly. On the given moment shares are trading in the region of $27, and the capitalization of the company constitutes only $16.27 billion. The most revealing multiplier — Forward P/E. At Super Micro it right now is located on the level of 12.
For comparison: companies of the technological sector with similar paces of growth value themselves in a P/E of 30, 40, and even 50. A valuation in 12 profits is characteristic for stagnating manufacturers of tooth paste or coal. But by no means not for one of the leaders of infrastructure of artificial intelligence.
From the point of view of dry digits and business-logic, the current price of SMCI — this is a real gift of fate. But the market rarely errs simply so. If an asset costs so cheaply, means, in the closet is hidden a very large skeleton.
Legal mess
The problem of Super Micro hides not in balance reports and not in factories. The problem, most likely, is in lawyers and controlling organs. The market began with suspicion to relate to the company still in 2024. Then, on the background of the investigation of short-sellers from Hindenburg Research, the prestigious auditor Ernst & Young severed ties with SMCI.
The company operatively found a replacement in BDO USA, and it seemed, that the situation stabilized itself. The logic in the beginning of 2026 was simple: if the new auditor for a year with a tail did not find fatal problems and signs reports, means — this is a closed chapter. The question of trust was obliged to decide itself by itself thanks to time.
New blow and black lists
However in the spring of 2026 a new, much more scary skeleton fell out from the closet. The reason of the crushing collapse of quotes to current levels became not accounting mistakes, but an investigation of the Department of Justice of the USA. The essence of pretensions consists in the alleged violation of a harsh export control.
They suspect the company in that, that it allegedly delivered high-tech servers and sanctioned chips in bypass of American bans. By preliminary data, leaked into mass media, estimates suggest volumes up to $2.5 billion. Which, according to the investigation, went through complex chains of shell companies into countries and organizations, located under an American embargo.
Exactly these suspected violations fully crossed out all fundamental positive from the factories in Malaysia. The investigation of the DOJ — this is not simply a fine. In the worst scenario this threatens by the recall of export licenses, the blocking of accounts or the insertion of the company into governmental black lists. For a global American manufacturer of hardware this, probably, is equal in strength to a death sentence for the business.
The market fears in panic legal uncertainty. The market reasons so: what difference, how much cheap is P/E and how many racks Malaysia produces, if tomorrow the government of the USA can simply ban to them to trade?
Technological stickiness against the law
On the first glance, after news about the investigation of the DOJ, clients were obliged in panic to run from Super Micro to competitors. But in the world of high-tech data centers everything is arranged more complexly. A most powerful factor plays on the side of SMCI, which in the industry they call “stickiness”.
When a technological giant builds a data center for the training of neural networks, it purchases thousands of server racks. The primary contract — this is only a beginning. The personnel learns to service concretely this architecture, logistics and software sharpen themselves under it.
More than that, in systems of liquid cooling — and this is right now the main driver of the market due to the colossal heat emission of new chips — different manufacturers use themselves different connectors and standards. Racks of SMCI and racks of Dell are physically incompatible.
If a data center began to build itself on the architecture of Super Micro, transition onto the equipment of another vendor will cost into astronomical sums and will lead to critical delays. If in 2023 the company critically depended from one large client — Meta, then today the client base is diversified. Tesla (with its project xAI) and the gaining huge weight cloud provider CoreWeave, tightly tied with Microsoft, enter into it.
These clients already “sat down” onto the ecosystem of SMCI. Technological dependence is so high, that neither Elon Musk, nor Mark Zuckerberg will refuse from deliveries simply because of reputational risks.
But the main paradox hides here: the loyalty of the richest corporations of the world is powerless before the state machine. If the DOJ of the USA will decide to lay a veto on the export operations of Super Micro or to freeze their contracts with manufacturers of chips, technological “stickiness”, perhaps, will not save. Data centers simply will not receive their racks by law. And this confrontation — of a rock-solid product against a soulless legal machine — makes the situation unique.
Balance of risk and adventurism
What do we have in the dry remainder? Super Micro Computer — this is a textbook example of the dilemma “risk-profitability”, elevated into an absolute. From one side, brilliant financial perspectives are at us. Forthcoming reports fully can show, that the factory in Malaysia works like clockwork, margin recovers itself after dumping, and revenue continues to fly into space. From the position of digits the potential of growth of shares calculates itself multiply — these are not percents, these are multiples.
From the other side, over the company hangs the sword of Damocles of American justice. And the problem is in that, that legal risks do not cure themselves by good financial reports. If the DOJ of the USA will blacklist the company, no revenue already will have meaning. Which way the balance is tilted right now: into the side of risk or into the side of profitability? The honest answer — to say is hard. This is an equation, in which are too many unknown variables, inaccessible to a rank investor.
Conclusion: Decide yourselves
The current valuation in 12 expected profits (P/E ~ 12) speaks, perhaps, about one: the market already laid into the price of shares a deepest crisis and catastrophe. Fear is calling the shots, and the asset values itself so, as if the sentence already is brought out. For conservative investors, habituated to calm sleep and predictable dividends, Super Micro right now — this is a toxic asset, which they wouldn’t touch with a ten-foot pole. This is a territory, where fundamental analysis passes before news headlines.
But for investors with a high share of adventurism, ready to harsh “American roller coasters”, this, it seems, is a historical chance. To buy a company, on the technologies of which builds itself the future of artificial intelligence, by the price of a stagnating retailer — a rarest luck. If the worst scenario with the DOJ will not realize itself, and the company will get off by a conditional fine, the spring will uncompress itself with an incredible force.
High profitability always goes hand in hand with high risks. And in the case with Super Micro both these scales are cranked up to the maximum. And whether you are ready to play into this game — to decide is only to you.
On the date of publication, Mikhail Fedorov 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
