$SMCI 20261030 25.0 PUT$ Conditional view:

Super Micro Computer (SMCI)

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looks valuation-attractive but high-risk, rather than a straightforward “good buy now.” The central issue is not AI-server demand—it is whether the company can convert exceptional order growth into durable margins and cash flow without more balance-sheet or governance setbacks.

Current price: US$31.31 on 2026-10-20, down 2.46% intraday. It is 43.43% below its 52-week high of US$55.35 and sits at the 32.98th percentile of its 52-week range. Recent momentum remains weak: down 19.86% over five trading days and 24.62% over 20 trading days.

Valuation is the bull case. SMCI trades at 9.60x trailing P/E, 7.37x forward P/E, and 0.53x sales. Its trailing P/E is 45.46% below its own three-year average of 17.61x. It is also materially below server peers

Dell Technologies (DELL)

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at 26.24x trailing P/E / 1.89x sales and

Hewlett Packard Enterprise (HPE)

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at 27.97x / 1.74x. The discount reflects real risk, not merely market neglect.

Fundamentals have improved sharply. FY2026 revenue was US$39.06B, up 77.79% year over year, while net income rose 112.66% to US$2.23B. Gross profit increased 73.97% to US$4.23B. Consensus expects FY2027 revenue of US$67.10B and EPS of US$4.36, implying strong growth if execution holds.

The latest earnings strengthened the operating case. FY2026 Q4 revenue was about US$11.12B, slightly below expectations, but adjusted EPS exceeded expectations and gross margin recovered to roughly 17.5%–17.6%. Management also guided FY2027 revenue to US$65B–US$72B and disclosed more than US$60B of new orders/backlog. That supports demand visibility, though revenue recognition still depends on customer site readiness and delivery execution.

Tonghuashun

3g.cnfol.com

Cash conversion is the key weak point. FY2026 operating cash flow was negative US$6.81B , versus net income of US$2.23B. After US$162M of capex, free cash flow was negative US$6.65B . The working-capital build was substantial, notably inventory of US$12.90B and receivables of US$6.13B. This is consistent with a business scaling rapidly, but it means reported earnings are not yet translating cleanly into cash.

Price action does not yet confirm a durable turnaround. The short-term trend is volatile upward, but the medium-term trend is still classified as a clear decline. Five consecutive sessions of large-order outflows preceded today, and the estimated average capital cost is US$38.73—above the current price. That suggests many recent buyers remain underwater.