SMCI#109
Thesis
SMCI was too cheap heading into earnings. Baseline fundamentals intact despite negative headlines (China smuggling scandal, ORCL competition). Forecast clean beat and raise. Contrarian long.
By @ParadisLabs · View post ↗
Original post text
How is my SMCI trade a ~50% gainer in a month lol? -> Realised they were too cheap heading into earnings. -> All while baseline fundamentals remained intact. -> Forecasted a clean beat + raise. -> Had the balls/delusion to go long despite China chips smuggling scandal + ORCL competition.
🐂 Bull Case
- Forward PE of 14.3x with 123% revenue growth and 326% earnings growth — extreme growth at value pricing → massive earnings power
- Post-earnings beat + raise momentum continues → SMCI gaining market share in AI server buildouts
- Breaking above SMA50 at $28.67 toward $46 → technical breakout with 2x volume confirmation suggests institutional accumulation
🐻 Bear Case
- Gross margin only 8.4% — extremely thin margin business vulnerable to any component cost increase or pricing pressure
- Negative FCF of -$7.4B — massive cash consumption to fund growth; debt-to-equity at 121x is alarming
- China smuggling scandal and ORCL competition create ongoing headline risk → sentiment-driven selloff potential
🚫 Invalidation
Close below SMA200 ($36) on above-average volume, or gross margin drops below 7% indicating pricing power loss
Break Conditions
- Gross margin compresses below 7% — would signal pricing power loss in AI server market
- Short interest at 18% + negative FCF → short squeeze risk but also genuine solvency concern if growth stalls
Price Tracking
| Label | Ticker | Price | Recorded |
|---|---|---|---|
| t+3d | SMCI | $47.04 | 2026-06-03 18:34:22 |
Metadata
T0 Price: $46.09
Created: 2026-05-31 18:32:53
Scored: 2026-05-31T18:34:50.984899+00:00
Updated: 2026-06-03T18:34:22.236195+00:00