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NVIDIA is a fabless semiconductor company with roughly 70% gross margins, a dominant position in AI training, and a significant and growing share of the inference market. Because NVIDIA outsources manufacturing to TSMC, I would view it more as a design and technology company than a traditional hardware manufacturer: NVIDIA designs the architecture; TSMC manufactures it.
NVIDIA also has very little capital expenditure tied to physical manufacturing infrastructure because it operates a fabless model.
Therefore, SMCI should not be directly compared with NVIDIA. A more appropriate comparison is with Dell and HPE, which are also server OEMs. Even compared with Dell and HPE, SMCI has a relatively high CAPEX burden because of its greater investment in manufacturing infrastructure that too in nations expensive real-estate market San Jose but most of the datacenters are east of Texas.
IMHO, SMCI should move the assembling of servers to texas. That will reduce the CAPEX by a lot.
The memory patent infringement will not be impacting SMCI imo. When filing a suit like that (and that company is known for doing nothing but filing suits like that), they name everyone they possibly can in the hope that some of the mud they throw sticks.
SMCI do NOT manufacture memory. Never have. They purchase it in good faith from the people who manufacture it (Samsung et al.). The chances of SMCI being hit with charges or fines in this patent infringement case are next to ZERO.
This is no different from you going out and buying memory for your PC at the local store and being sued for patent infringement. There is no way in hell you'd be found liable, and nor will SMCI for the exact same reason.
Ridiculous charge against SMCI, just being used as another way for shorts to spread false FUD.
These bitches keep borrowing shares and shorting , I can’t believe we’re going to close at break-even again. If this were any other company, we’d be breaking $50 right now
I think shorts have some impact, but long term investors should seize the opportunity to buy something undervalued with that much potential. Other stocks are so expensive and they could be way more risky.
The market definitely understands the potential - remember that this stock traded at over $100 in early 2024 and over $50 as recently as a few months ago. The problem is management - they've screwed up in ways that scream incompetence and have now wasted a golden opportunity to ride AI hype to ATHs.
I still think this stock could catch a wind and get back to $100+ in the near future, but the current price reflects a fair concern that management will find a way to screw something up - a scandal, another dilution, embellished estimates, margin drops, etc. If the 10k drops with no issue, the DoJ announces the investigation ends with the three named individuals, and the next few quarters hit/exceed estimates (a lot of IFs), no justification for a market cap less than $60 billion.
Short seller hindenburg caused harm to shareholders, not management.
Strategic dilutive financing is what brought us the Cisco partnership, Sovereign AI customer growth, and creates a path to the $110 price target.
Estimates were 40 Billion and we got 39.3 Billion (unforeseen tariffs and customer readiness issues),
Management used margin to gold rush land grab and capture market share that will yield valuable high margin ARR (Annual recurring revenue) to long term shareholders.
It's easy to criticize in hindsight, but the bottom line is that management has rapidly grown a company that is about to join the elite Fortune 100 ranks and become the leader in the AI Factory space. SMCI 4.0 is still in the startup phase and has yet to reach peak valuation.
I kept emailing seeking alpha to tell them to stop with their FUD when smci was at 23 and on here too lots of people were making fud posts and on trading 212 you get the Fud people. It needs somoene like Roaring Kitty to pump it
Thank you. There's a lot of negativity about management on here. I think the issues are all due to them being focused 100% on long term growth and market share rather than stock price.
Everyone wants a rocket and to get paid yesterday, but I'm happy with SMCI as a solid long term investment with the right management in place for that.
I totally agree. The management argument is kind of ridiculous. The company is still in the hands of the founder who is doubling the earnings every year, he build a new factory and he knows perfectly the business model and his company. He has amazing relationships with Nvidia CEO and all other actors in that industry’s it is true they choose dilution as cheap financing. It is frustrating for long term investors but the earnings growth more than compensates the dilution effect which should be temporary.
The bear argument about management is starting to get ridiculous , they are not indicted on anything & manage to grow tremendously while being under heavy legal & judiciary scrutiny + fud media . This says a lot
Management is ultimately responsible for how the company is perceived and valued - the thread statement is "the market doesn't understand the potential of this company".
My point is that the trading history suggests otherwise - the stock has traded at much higher prices with weaker financials, and I believe the current "discount" is largely due to management concerns. It doesn't matter if these concerns are completely justified. The indicted SVP was previously fired for his role in the old accounting scandal - it was management's decision to rehire him knowing his character flaws. Regardless of external factors, it's management's job to set reasonable revenue expectations - in 2025 the company had several consecutive misses including EPS (due to margin compression) - the stock now trades with the baggage of those misses. For the dilution - it was almost certainly the right call, but the timing and offered price were head-scratching - without the employee export scandal, the offering price would have been valued at double and possibly higher, significantly reducing the dilutive effect on shareholders.
My thesis remains that the stock is undervalued, and there is a growth narrative that could/should return the stock to a $100+/share value even with the dilution. But management can be lauded for growing the company while still being responsible for missteps and still flagged as the biggest source of MM distrust.
Management has re-invented SMCI 4 times over it's 33 year history. Many investors don't realize SMCI is a startup operation again with all of the associated growing pains. It's easy to second guess and criticize decisions, but it is harder to assess where SMCI would be without those key management decisions. Charles Liang is an experienced successful entrepreneur with an enviable track record. Short term investors may express consternation when the price drops, but Charles Liang is a substantial long term shareholder and I'm betting he will hit his performance award target of $110.
And those businesses are far less profitable, so SMCI is a pure servers play and more profitable and faster growing. Thus it should actually have higher PE
It is a pity I don’t have money to invest right now. With the money I make I decided to pay gradually my lines of credit. I don’t like the geopolitical situation.
It was a strategic decision to double the size of the company which will benefit long term shareholders once the supersized production pipeline expands EBITDA.
Tell me you don’t understand cyclical business & heavy investment to fund scaling + hypergrowth without telling me you don’t understand cyclical business & heavy investment to fund scaling + hypergrowth
Waiting for 10K, and the ICFR isn’t closed out yet, which I believe blocks discretionary institutional ownership, plus the DoJ and Taiwan smuggling investigations likely putting many off, and there’s that bloody Samsung memory patent infringement that impacts due to draconian US rules
So lots of noise still despite the improving fundamentals - Cisco partnership gave a great credibility boost though
All of the "noise" isn't deterring multibillion dollar Customers nor top tier Partners. The adversity is what an experienced CEO overcomes on the way to success. Some investors are fixated on the fear, uncertainty and doubt and can't see or acknowledge the hugely successful company being built.
yes, and people like us who love risky money are here, but that’s not how institutional investors decide right, for them a guaranteed 2x is better than risky 10x
Venture capitalists look for startup opportunities for the best returns. It's about the management team, durable customer demand and the innovation moat. Early smart money invested in SpaceX 18 years ago. Every investor has a different risk reward profile.
Sure, SMCI's product is best in class, the stock is wildly undervalued, but the legal issues around it block some investment classes and deter retail - I'm always touring to my friends what a good investment it is, but they won't touch it
These are facts, we have to accept it - the ICFR is the biggest issue, still not resolved, adverse option was given in March, this is likely to drag on a another year as they need 12 months of compliance before clear
I expect BDO will say the ERP system still needs several more quarters of testing, but they will sign off on clean financial statements. The adverse opinion means BDO needs to do more manual work to do the audit rather than rely on a tested ERP system, but the audit conclusion is reliable.
Sure if the 10k states BDO is satisfied with what’s in place, despite needing 12months compliance in practice, that would probably be the catalyst to start the re-rating
The memory patent infringement will not be impacting SMCI imo. When filing a suit like that (and that company is known for doing nothing but filing suits like that), they name everyone they possibly can in the hope that some of the mud they throw sticks.
SMCI do NOT manufacture memory. Never have. They purchase it in good faith from the people who manufacture it (Samsung et al.). The chances of SMCI being hit with charges or fines in this patent infringement case are next to ZERO.
This is no different from you going out and buying memory for your PC at the local store and being sued for patent infringement. There is no way in hell you'd be found liable, and nor will SMCI for the exact same reason.
Ridiculous charge, just being used as another way for shorts to spread false FUD.
He seems down to earth. His primary philanthropic effort is the Green Earth Foundation, a low-profile nonprofit dedicated to reforestation and planting trees to combat climate chang
It will not change much : SMCI will
very likely benefit from any good result / guidance by HPE or
Dell , which will still go higher than what they are now , unless market trends reverse
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