$Super Micro Computer(SMCI.US)

Here's some psychological comfort for everyone

Prerequisite: Never use leverage

NVIDIA dropped 70% in 2022, don't be complacent

There are many players in this field - Dell, HP, ASUS, MSI, Gigabyte, etc. - with fierce competition. SMCI is currently in the painful transition from AI server provider to AI infrastructure solution provider

Main reasons for current price drop:

1. Poor Q1 earnings and Q2 gross margin guidance made the market doubt its competitiveness and moat

2. Overvalued companies usually have monopoly characteristics like Eli Lilly, NVIDIA

3. Undervalued stocks often face cutthroat competition like HP, Dell

Priced as PC hardware company: reasonable at $5-10

Priced as high-growth AI infrastructure company: reasonable around $30

Reasons for optimism:

1. Q2 was the gross margin trough at ~6.5%, mainly dragged by low-margin $13B orders. But these strategic orders won't stay this low (reference Dell's guidance)

2. Early launch and fast implementation of DCBBS solution helps capture market share. Maintenance alone will become long-term profit at scale

3. Sovereign nations, research institutions and schools will expand purchases. SMCI's rapid DCBBS deployment gives it an edge