Jul. 23 at 1:25 PM
$SMCI Based on valuation alone, SMCI appears to trade at a meaningful discount to several AI infrastructure peers, but the “right” price depends on whether investors believe its recent margin improvement is sustainable.
Using the approximate multiples from the recent discussion:
Company Approx. Forward/Trailing P/E
SMCI ~8x forward P/E
Dell (
$DELL ) ~32x trailing P/E
Arista (
$ANET ) ~60x trailing P/E
Vertiv (
$VRT ) ~76x trailing P/E
Because these companies have different business models, SMCI probably shouldn’t trade at the same multiple as Arista or Vertiv. However, if SMCI consistently demonstrates:
* 15–17% gross margins,
* a
$60B+ order pipeline,
* record backlog,
* and strong AI demand,
then a forward P/E of only 8x looks unusually low for a company growing in one of the fastest-expanding AI markets.
A reasonable re-rating could look something like this:
* 12x forward P/E: Conservative re-rating if margins remain elevated.
* 15–18x forward P/E: If investors gain confidence that higher margins are sustainable and execution remains strong.
* 20x+ forward P/E: Would likely require multiple quarters of margin expansion, strong cash flow generation, and continued AI demand. (
$75 Price Target)
The key catalyst isn’t just revenue growth anymore, it’s proving that the higher margins weren’t a one-quarter anomaly. If that happens, the market may begin valuing SMCI less like a commodity hardware assembler and more like a differentiated AI infrastructure provider.
