(For those who want to skip the preamble, skip down three paragraphs. For those two-sentence sort of folks, skip to the TL;DR. If your name is Quentin, consider changing it??)
If you've been here for more than two minutes, you're aware that AI is currently All. The. Rage. Capex spend is going absolutely buck-wild, causing this market to go ballistic in ways we've never seen before. Some would argue it's a bubble, and in a way I think it is, but there's a key difference between today's bubble and others we've seen before: companies are actually making ridiculous amounts of money to help justify the levels we're at.
In the traditional sense, bubbles tend to be when the market is trading at insane multiples. For example, during the Dot-Com Boom you saw the largest companies trading above 200x fwd P/E ratios (if you don't know what that is, don't worry, you belong here). Presently, it's actually fairly reasonable for many, with even the largest industry leaders still being under 30x. So in theory, this market still has much, much room to run if it wants to go crazy.
Now if you're anything like me (I would hope you aren't), you're wondering where the hell to put your hard earned money that you sold your body for. Oh, just me? Anyway... AI stocks, semiconductors, and most of the companies that relate to them (manufacturing, sales, materials, etc.) have already gone and run along side with them. So despite their seemingly reasonable valuations, it's hard to just jump into something that looks like it could plummet to hell in a heartbeat.
I did say most, didn't I?
Enter: SMCI
(I have to acknowledge the nice-ass rhyme there)
You know the saying "in a gold-rush, sell the pickaxes"? Yeah, that'll be these guys. Server racks, power connectors, liquid cooling... the list goes on and on. And with a "measly" \~25B market cap and a 19x fwd P/E ratio, there is still so much room for them to grow. So why now, why, if everything else has gone goo-goo, does this company stand out?
Well, simply put it's because they're not all sunshine and roses. Surprise, right?
To start, their gross margins for the last reporting period were a mere 9.5%. Bleh. Blech, even. This is (mostly) due to them having been in the sort of "grow-as-fast-as-possible-at-any-cost" mindset. However, because of that, they've grown, and their Q3 revenue was $10.23B for 2026, representing a YoY growth of a whopping 123% (this was actually a miss, which has helped keeped the stock down).
Now let's do some simple math with that information. If we divide their $25B market cap by their trailing annual revenue of $33B, that puts it at a price to sales ratio, or P/S ratio, of \~.75. In normal market conditions, that's a good ratio. Right now, it's amazing. There's almost no other company so involved in the AI space pulling such numbers that comes anywhere close to that.
(I think HP is around there too, but fuck HP, all my homies hate HP)
"But Sir Shishkebabs", I hear you say, "what does that matter if their profit margins are complete shit?" Might I remind you, we are in a ridiculous growth environment for anything that touches AI; much less is right in the thick of it. Even if your expansion is planned to slow down a bit, you'll still continue experience fast growth in such a market.
SMCI is expected to net somewhere between $39-40B in 2026, representing a 80-85% increase from 2025. This would put them at an approximate .62 P/S ratio for 2026. And with how Dell just reported sales (insane beat btw), we may very well see significantly bigger reports than expected. I would almost expect it.
Oh, and 2027 is expected to be anywhere from 25%-50% YoY revenue growth. (I'd put it towards, or even above the higher end)
To make it even better, because Super Micro (hey that was my nickname in high-school) has started to shift to less of a "grow at any cost" and more of a "grow-with-the-flow" mindset (mostly due to a recent leadership overhaul), their expenditures should shrink, making it so that their margins should begin to increase as a result. And suddenly, it starts looking like there is a lot of room to improve.
But what else, surely there must be something keeping giddy investors from driving this up to the sky?
And you'd be right, if you actually said that.
In March 2026, they ran into a wee bit of legal trouble with the DOJ regarding smuggling AI servers to China. Yeah, I get it, it sounds comically bad. But hear me out.
The case explicitly targeted individuals within the company, SMCI itself isn't even a defendant. However, the turmoil has kept Wall Street from getting too into it, which exactly why it's such a sleeper play. They've actually collaborated with Taiwanese authorities to halt the distribution of server technology, and have so far managed to retrieve 50 servers, which should significantly help them escape significant penalty, probably. (No guarantees, I'm not Craftsman).
Now because of all this, they do have several shareholder lawsuits ongoing, of course, but compared to something federal they're a thorn in the side in an AI-scape wide. They have a ridiculous amount of potential energy, and I have full confidence this one will start to wake up soon. Of course, being as sure in this company as I am, I hold the below positions:
SMCL x 20 @ 111.11
SMCI 6/18 45c x 10
TL;DR: SMCI, a very key player in hardware relating to data centers, has been getting absolutely hammered due to somewhat overstated legal troubles, along with smaller than preferred profit margins, but looking at the bigger picture they're A) pulling a ton of revenue in comparison to their MktCap and B) are extremely well placed within the market for a ton of future growth