From Nasdaq: 2025-05-23 17:00:00

Super Micro Computer (NASDAQ: SMCI) stock has rebounded over 50% in the past month after falling close to 90% from all-time highs. The AI beneficiary operates in a rapidly changing sector, leading to stock price swings, with profit margins moving in the wrong direction. Last quarter, revenue grew to $4.6 billion compared to $3.85 billion a year ago. However, the company’s gross profit margin has fallen to 11.27% over the last 12 months. Investors need to consider the cyclical nature of Super Micro Computer’s sector and the potential risks associated with this stock.

Super Micro Computer operates in the AI, semiconductor, and data center markets, experiencing explosive growth but also facing potential industry downturns. The company’s sliding profit margins and a short report alleging accounting fraud present risks for investors. While the stock may seem cheap based on its P/E ratio of 23.6, falling bottom-line profits and a cyclical downturn possibility indicate otherwise. Super Micro Computer stock carries significant risks and may not be a suitable investment due to these downside factors.

Before investing in Super Micro Computer, consider that the Motley Fool Stock Advisor team did not include it in their list of the 10 best stocks to buy. The stock’s potential for growth and profit margin challenges, along with the cyclical nature of its sector, make it a risky investment. Investors should weigh these factors and potential downsides before deciding to invest in Super Micro Computer.



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