Super Micro Computer Stock Clears New Path Higher on Saudi Orders

Key Points

• Super Micro Computer stock has cleared its way for a higher price, leaving some of the bearish beliefs and theses behind on a new deal.
• By partnering with a Saudi company, the integrity of the company's equipment and stability remain. 
• After accounting for these new earnings, Wall Street analysts may have to value the stock higher.

Within the technology sector, a list of names has become hot and popular over the past two years, for good and bad reasons. When it comes to shares of Super Micro Computer Inc. NASDAQ: SMCI, investors have been whipsawed by waves of repeated uncertainty and volatility for different reasons, though it looks like this company's future path (and its stock price) might be cleared for new highs coming up.

Most investors will still feel the aftereffects of the legal allegations made against Super Micro Computer stock, when the main bearish case was centered around the belief that the company was sort of “cooking” the books, and misguiding investors as to how much money the business was making. 

Things went as far as the stock selling off due to financial filing delays and a change in the auditing and accounting team.

While management took the right step, the bears weren’t that willing to give up on their belief that Super Micro Computer might be in danger after all.

The price action that followed (a decent-sized rally) was a warning for what was to come next for these bears, though the final blow ended up coming in mid-May 2025 after President Trump had a visit with the Saudi government.

A Major Catalyst Just Hit Super Micro Computer

After this visit and talks on trade and new Saudi government investment in United States companies, one major headline broke out to push Super Micro Computer's name back to the table and consider the optimistic future this stock could deliver in the coming months.

The release concerns a new collaboration between Super Micro Computer and the Saudi government to develop hyperscale artificial intelligence campuses across the region. Specifically, Super Micro Computer has partnered with DataVolt to support the development of the needed infrastructure through data centers.

Understanding the amount of secular growth that the Saudi region can (and probably will) experience in the coming years, being one of the first names to hit the ground running in this new cycle will prove to be a bullish catalyst for stock valuations during this time.

More than that, this Saudi decision might put some of these bearish views to rest once and for all. With this new partnership in place, investors can safely assume that Super Micro Computer’s equipment and services are actually in a leading position in the industry and are being accepted or adopted by more notable customers.

What the Market Thought of the Deal

On an initial view, investors can consider the price action for Super Micro Computer and what this new announcement means for the future. Over the past month, the stock rallied by 41.1% to outperform the broader S&P 500 index and the rest of the technology sector.

Considering this reaction, investors can think of this new announcement as a significant catalyst that is now pricing in future earnings growth and therefore higher ceilings for the stock price. Price action is nothing but a mechanism of consensus, and this consensus is usually focused on the next three to six months of financial outcomes, showing the bull case for the company.

Now, this is where the landscape in Super Micro Computer gets interesting for investors today. All of these financial scenarios for future growth have likely not yet been modeled and recognized by Wall Street analysts, which creates the potential for a new catalyst to occur in two ways.

The first is earnings per share (EPS) forecasts made by these analysts, which currently sit at $0.94 per share for the fourth quarter of 2025, though that might eventually get pushed higher once the outcome of this new partnership is accounted for. The second way investors could see a new catalyst down the road is in price targets.

While today’s consensus price target is only $45.6 per share, implying that Super Micro Computer could rally by an additional 9.5% from where it trades today, investors must remember that these valuations were set before the new Saudi partnership.

Once these benefits are incorporated into financial statements and valuation models, investors will likely see some analysts come in with more realistic (and probably higher) price targets, initiating a new wave of buyers as well. However, it seems that some of these buyers have already jumped the gun.

Those from UBS Asset Management decided to boost their Super Micro Computer stock holdings by 2.7% just days after the company made the Saudi partnership announcement, bringing their stake to $99 million today and giving investors another sign of confidence to lean on.