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The Super Micro Computer (Nasdaq: SMCI) stock price has lost steam in the past three months as concerns about its growth continues. It has plunged by over 37% from its highest level this year, meaning that it is in a deep bear market. In contrast, Nvidia remains at an all-time high, giving it a market cap of over $2.8 trillion.

Growth concerns remain

Super Micro Computer shares have plunged as concerns about its valuation and revenue growth has continued. This decline has coincided with that of other semiconductor-related companies like AMD, Intel, and Marvell Technology.

The most recent financial results showed that Super Micro was still growing. Its revenue jumped by 200% to $3.85 billion in the last quarter. This was an important number since the company made $3.5 billion in the four quarters of 2021.

SMCI’s revenue grew because of the strong demand for its AI rack scale DLC systems like NVIDIA H100, Intel Gaudi, and AMD MI300A/X. The company has also become the first one to market NVIDIA’s Grace Hopper and Blackwell solutions.

Its management expects that the company has more room to grow, albeit at a slower pace. The expectation is that its revenue will jump by 112% in the FY24 financial year to $15.1 billion. This revenue growth is happening at a time when its profits are also booming. It has generated a net profit of over $1 billion in the trailing twelve months.

Super Micro Computer hopes to supercharge this growth by launching new AI products. The company launched a ready-to-deploy liquid-cooled AI data center solutions. It also unveiled a new X14 AI tools with liquid cooling features.

Therefore, I believe that Super Micro Computer is not as overvalued as most analysts thinks. It has a market cap of about $45 billion, giving it a forward price-to-sales ratio of 3.02, which is a few points above the industry median of 2.9. It also has a forward P/E ratio of 34.4, which is a few points above the sector median of 30. The forward PEG ratio of 0.69 is lower than the industry’s median of 1.2. 

Therefore, the company is still trading at a discount. While its revenue growth will slow in the coming years, I suspect that it will have double-digit growth in the foreseeable future. This justifies these valuation multiples.

SMCI stock price forecast

(Click on image to enlarge)

SMCI chart by TradingView

The daily chart shows that the Super Micro Computer share price peaked at $1,231 this year. It has crashed by over 37% from its highest level this year, meaning that it has moved into a bear market.

The stock has moved below the 50-day moving average and is now attempting to cross the 100-day MA. At the same time, the MACD indicator has moved below the neutral point while the Relative Strength Index (RSI) has moved below the neutral point.

SMCI stock has formed a symmetrical triangle pattern, which is nearing its confluence level. Therefore, the stock’s outlook for now is moderately bearish, with the next point to watch being at $676, its lowest swing in April. In the long term, however, the shares will likely rebound as its revenue growth continues.

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