This year has been a case of one step forward, two steps back back for high-performance server and storage solutions provider Super Micro Computer (SMCI). After financial services major JPMorgan warned of challenges for the company ahead, the company recently nabbed a $20 billion deal with DataVolt, a data center firm from Saudi Arabia.

However, the joy seems to be short-lived for Super Micro after reports emerged that billionaire investor George Soros’ fund, Soros Fund Management, sold its entire stake in the company as of the end of the first quarter. According to the Q1 13F filing, Soros Fund Management initially opened a position in SMCI in the fourth quarter of 2024 and held 163,500 shares. It exited that position completely as of Q1. 

Now, should investors follow suit? Let’s find out.

Seemingly Shaky Financials (With Strength Underneath)

If financials are the sole criterion for evaluating a stock’s merit, then Super Micro’s recent performance would leave much to be desired. The company’s headline numbers over the past few quarters have consistently failed to impress, and its latest results offered no exception. Earnings declined yet again, and while revenue showed some growth, it remained modest.

For the most recent quarter, revenue reached $4.6 billion, reflecting a 19.5% increase year-over-year. Despite the positive growth, the figure came in below market expectations and fell short when compared to the stronger top-line expansions reported by other players in the AI space. Earnings per share dropped sharply to $0.31 from $0.66 a year earlier, a disappointing result that also missed Wall Street projections.

Still, one area where Super Micro showed some encouraging signs was cash flow. Net cash provided by operating activities for the nine months ended March 31, 2025, stood at $795.9 million — a stark turnaround from the $1.8 billion cash outflow reported during the same period the previous year. The company exited the quarter with a healthy cash reserve of $2.5 billion, comfortably covering its short-term debt obligations, which were approximately $64 million.

Looking ahead, Super Micro has forecast net sales in the range of $5.6 billion to $6.4 billion, with projected earnings per share expected to land between $0.40 and $0.50.

SMCI stock has risen by an impressive 45% on a YTD basis, leading to an increase in its market cap to $26.7 billion.

Current Strategic Positioning

In an earlier analysis, I highlighted how Super Micro’s status as one of the most polarizing names on Wall Street makes it hard for investors to form a solid opinion on the stock as there is always news flow around it. Nothing has changed since I first wrote that. 

One positive update was that the company inked a massive $20 billion with Saudi-based data center firm DataVolt, which many believe will provide a significant uplift to its revenues. Moreover, the collaboration with DataVolt is well-aligned with the larger framework of strategic cooperation currently unfolding between the United States and Saudi Arabia.

Encouragingly, SMCI’s top brass has once again emphasized its unwavering focus on driving innovation and rapidly broadening the company’s suite of AI-related offerings. In line with this objective, the firm is working closely with AI leaders Nvidia (NVDA), Advanced Micro Devices (AMD), and Intel (INTC), to ensure its solutions are in step with the industry’s shifting technological landscape and remain compatible with high-demand components like Nvidia’s latest Blackwell accelerators.

These efforts have helped fuel robust projections from analysts, who now anticipate the company’s forward revenue and earnings growth to reach 61.54% and 29.31%, respectively.

Still, some near-term challenges persist. Inventory buildup from previous-generation hardware, such as Nvidia’s H100, continues to pose an overhang, while the ongoing erosion in gross margins raises concerns about longer-term profitability dynamics.

What Do Analysts Think?

Taking all of this into account, analysts have deemed the stock a “Moderate Buy” with a mean target price of $44.66 that has already been surpassed. The high target price of $100, however, indicates upside potential of about 132% from current levels. Out of 16 analysts covering the stock, four have a “Strong Buy” rating, three have a “Moderate Buy” rating, seven have a “Hold” rating, and two have a “Strong Sell” rating.