<div id="readability-page-1"><div> <h2>Key Points</h2><ul><li>Super Micro Computer saw nice revenue growth in its latest quarter. </li><li>Its margins are improving, and it should benefit from continued AI infrastructure spending. </li><li>Certain factors about the business make it very risky to buy right now. </li><li>10 stocks we like better than Super Micro Computer ›</li></ul>Shares of Super Micro Computer (NASDAQ: SMCI) zoomed 68% higher in May, according to data from S&amp;P Global Market Intelligence. The computing hardware provider for artificial intelligence (AI) posted significant growth in its latest quarterly results, along with improving gross margins and overall profitability. It has been a lumpy road for Super Micro Computer, with massive price drawdowns and short-seller reports, but the stock has gotten off to a better start in May.Here's why the stock was dipping, and whether it is a buy for your portfolio now. Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an &#34;Indispensable Monopoly&#34; providing the critical technology Nvidia and Intel both need. Continue »<h2>More growth, margin recovery</h2>In the quarter ending in March, Super Micro Computer posted net sales of $10.2 billion, up from just $4.6 billion a year prior. After a lull in 2025, the business has roared back with its full-scale IT, data center, and AI computing services. Super Micro Computer is the middleman between computer chip designers like Nvidia and the data center infrastructure providers like Amazon. With capital expenditures on AI continuing to rise, Super Micro Computer should have a growing demand from its customer base. In late May, its competitor Dell reported earnings with 88% revenue growth. A rising tide is lifting all stocks in the sector, with investors wanting a piece of any stock associated with the AI build-out at the moment. Super Micro Computer is generating slim margins, but they have improved from years past. Gross margins were 9.9% last quarter, and income from operations grew to $626 million this quarter compared to $147 million a year prior. <img src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-dXJsPWh0dHBzOi8vZy5mb29sY2RuLmNvbS9lZGl0b3JpYWwvaW1hZ2VzLzg3MzA1Ny9haS5qcGcmdz03MDA?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="700" height="466" original-src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-dXJsPWh0dHBzOi8vZy5mb29sY2RuLmNvbS9lZGl0b3JpYWwvaW1hZ2VzLzg3MzA1Ny9haS5qcGcmdz03MDA"/>Image source: Getty Images. <h2>A cautionary tale with Super Micro Computer stock </h2>With rapid growth, Super Micro Computer's stock may look cheap given its current price-to-earnings ratio (P/E) of 25. However, there are many concerning factors with this business. First, short sellers have thoroughly researched this business and have not liked what they found, alleging circular revenue deals and potentially skirting of export ban rules. These are risks investors should not ignore. As well, Super Micro Computer's inventory and accounts receivable are booming, meaning that the revenue it has posted on its income statement is not being converted into cash and deposited in its balance sheet from customers. This is a sign of weak revenue and weak negotiating leverage with its customers.Lastly, if spending on AI infrastructure slows, Super Micro Computer's revenue is likely to collapse. With this in mind, it is hard to find a reason for an investor with a long-term time horizon to buy the stock right now. Avoid Super Micro Computer despite its rapid revenue growth. <h2>Should you buy stock in Super Micro Computer right now?</h2> Before you buy stock in Super Micro Computer, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Super Micro Computer wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $449,393!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,366,006!* Now, it’s worth noting Stock Advisor’s total average return is 983% — a market-crushing outperformance compared to 212% for the S&amp;P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of June 3, 2026. Brett Schafer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Nvidia. The Motley Fool has a disclosure policy. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. </div></div>

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Super Micro Computer (SMCI) shares surged 68% in May, driven by strong revenue growth to $10.2 billion and improving margins fueled by AI infrastructure demand. Despite these positive financials, the article highlights significant risks, including short-seller allegations of circular revenue deals, weak cash conversion due to booming inventory and receivables, and potential vulnerability if AI spending slows. Consequently, the author advises against buying the stock for long-term portfolios, citing high risk despite a seemingly low P/E ratio.

- Super Micro Computer reported significant revenue growth, with net sales reaching $10.2 billion, boosted by rising demand for AI infrastructure.  
- Despite improving margins and profitability, the stock poses risks due to potential issues with circular revenue and increasing inventory, raising concerns about cash flow.  
- Analysts suggest avoiding the stock in favor of other recommended investments, as slowdowns in AI spending could dramatically impact future revenue.

Why Super Micro Computer Stock Jumped 68% in May