6. Super Micro Computer, Inc. (NASDAQ:SMCI)
5 Year Revenue Growth: 33.68%
5 Year Net Income Growth: 75.82%
TTM Net Income: $1.21 Billion
Number of Hedge Fund Holders: 33
Super Micro Computer, Inc. (NASDAQ:SMCI), also known as Supermicro is a technology company that specializes in creating high-performance servers and storage systems crucial for various applications, including cloud computing, artificial intelligence (AI), and data centers.
Super Micro Computer, Inc. (NASDAQ:SMCI) was quickly recognized as one of the winners in artificial intelligence as the company posted impressive revenue growth on the back of building data centers for third parties. It has grown its top line by 34% and bottom line by 76% during the past 5 years.
However, the stock recently took a hit and has been facing a series of challenges including the failure to file the 10-K form for the fiscal year that ended on June 30, 2024. The deadline for this filling was August 29, 2024, which has still not yet been met. The delay in filling the 10-K form means that the company can be delisted from NASDAQ and would have to trade over the counter. Management has submitted a compliance plan to The Nasdaq Stock Market for an extension period to regain compliance with the Nasdaq continued listing requirements, which if approved will give the company 180 days to fill the said form. Another hit for the stock came when Ernst & Young resigned stating that it was unwilling to associate itself with management’s prepared financial statements.
The delay in filling and the fall in share price is impacting the business of the company. On November 5, Super Micro Computer, Inc. (NASDAQ:SMCI) announced an update regarding its first quarter results for fiscal 2025, which ended September 30, 2024. The company expects net sales in the range of $5.9 billion to $6 billion down from the previous range of $6.0 billion to $7.0 billion. However, on the bright side, the new range at the midpoint is still up 181% year-over-year, driven by strong AI demand from its old and new customers.
Despite the challenges, it is still one of the best extremely profitable stocks to buy now. The stock was held by 33 hedge funds in Q3 2024 and the company has made $1.21 billion in net income over the trailing twelve-month period.
Columbia Acorn Fund stated the following regarding Super Micro Computer, Inc. (NASDAQ:SMCI) in its Q3 2024 investor letter:
“Super Micro Computer, Inc. (NASDAQ:SMCI) had a tough quarter due to a confluence of negative events. It declined but is still up significantly for the year. While demand for the company’s AI server racks remains strong, with revenue up over 100%, gross margins have fallen sharply for two straight quarters, implying a price war. In addition, Super Micro was the subject of a short-seller report and a delay in filing its annual report with the SEC. We have been taking profits in the stock all year and have only a small position, which we are maintaining given the strong performance and demand for Super Micro’s AI racks and a depressed stock valuation.”
