Super Micro Computer Inc (NASDAQ: SMCI), a global leader in high-performance, high-efficiency server technology and green computing, has seen astonishing growth over the past 5 years. An investment of just $10,000 in SMCI stock on February 8th, 2019 would be worth a whopping $366,383 today.
On February 8th, 2019, SMCI stock closed at $15.40 per share. Fast forward to February 3rd, 2024, and SMCI closed at a phenomenal $579.63 per share. That’s an increase of 3,663.83% in just 5 short years! Let’s take a look at what drove this incredible growth.
Steady Revenue Growth Year-Over-Year
SMCI stock has reported steady revenue growth each year for the past 5 years. From 2019 to 2023, total revenues have more than doubled from $3.5 billion to over $7.1 billion.
The company’s solutions for cloud computing, artificial intelligence, and 5G networking have been in high demand. In 2023 alone, SMCI saw revenue growth of 37% year-over-year.
| Income Statement (Last 5 Years) | |||||
| Year | 2023 | 2022 | 2021 | 2020 | 2019 |
| Revenue | 7,123 | 5,196 | 3,557 | 3,339 | 3,500 |
| Revenue Growth (YoY) | 37.09% | 46.06% | 6.53% | -4.60% | 4.16% |
| Cost of Revenue | 5,840 | 4,396 | 3,023 | 2,813 | 3,005 |
| Gross Profit | 1,283 | 800 | 534.54 | 526.21 | 495.52 |
| Selling & Marketing | 115.03 | 90.13 | 85.68 | 85.14 | 77.15 |
| General & Administrative | 99.59 | 102.44 | 100.54 | 133.94 | 141.23 |
| Research & Development | 307.26 | 272.27 | 224.37 | 221.48 | 179.91 |
| Other Operating Expenses | 3.65 | 8.08 | -2.83 | 1.41 | -1.02 |
| Operating Expenses | 521.87 | 464.83 | 410.59 | 440.56 | 398.29 |
| Operating Income | 761.14 | 335.17 | 92.93 | 58.59 | 97.23 |
| Interest Income | 0 | 0 | 0 | 0 | 0 |
| Interest Expense | 10.49 | 6.41 | 2.49 | 2.24 | 6.69 |
| Other Expense / Income | -0.01 | -9.29 | -28.36 | -30.87 | 3.74 |
| Pretax Income | 754.3 | 336.83 | 118.63 | 84.83 | 89.52 |
| Income Tax | 110.67 | 52.88 | 6.94 | 2.92 | 14.88 |
| Net Income | 640 | 285.16 | 111.87 | 84.31 | 71.92 |
| Net Income Growth | 124.43% | 154.92% | 32.69% | 17.23% | 55.78% |
| Shares Outstanding (Basic) | 53 | 51 | 51 | 51 | 50 |
| Shares Outstanding (Diluted) | 56 | 54 | 54 | 53 | 52 |
| Shares Change | 4.39% | 0.20% | 1.27% | 2.17% | -0.83% |
| EPS (Basic) | 12.09 | 5.54 | 2.19 | 1.65 | 1.44 |
| EPS (Diluted) | 11.43 | 5.32 | 2.09 | 1.60 | 1.39 |
| EPS Growth | 114.85% | 154.55% | 30.62% | 15.11% | 56.18% |
| Free Cash Flow | 626.79 | -485.98 | 64.94 | -74.67 | 237.71 |
| Free Cash Flow Per Share | 11.20 | -9.06 | 1.21 | -1.41 | 4.60 |
| Gross Margin | 18.01% | 15.40% | 15.03% | 15.76% | 14.16% |
| Operating Margin | 10.68% | 6.45% | 2.61% | 1.75% | 2.78% |
| Profit Margin | 8.98% | 5.49% | 3.14% | 2.52% | 2.05% |
| Free Cash Flow Margin | 8.80% | -9.35% | 1.83% | -2.24% | 6.79% |
In addition to strong top line growth, SMCI stock has also expanded profit margins over the past 5 years. Gross margins have improved from 14.16% in 2019 to 18.01% in 2023.
Operating margins are up from 2.78% to 10.68% over the same period. This demonstrates SMCI’s ability to translate revenue growth into profits efficiently.
New Product Innovation
SMCI stock has steadily introduced new and improved server systems optimised for modern workloads.
For example, in 2021 the company launched several new servers designed for artificial intelligence, cloud gaming, and edge computing applications. SMCI’s first-to-market capabilities in cutting edge servers have allowed it to capture more market share.
The company has made strategic investments to increase presence in high-growth markets such as cloud, AI, 5G, and edge computing. For instance, SMCI expanded operations in Asia and Europe to be closer to growth opportunities.
It has also partnered with industry leaders like Intel and Nvidia. These moves position SMCI stock favorably to capitalise on secular trends.
Improving Free Cash Flows
While SMCI stock reported negative free cash flow in 2022, it generated strong and consistent positive free cash flow in the years before and after.
Free cash flow per share has grown from $1.21 in 2021 to $11.20 in 2023. Robust cash generation enables SMCI to invest in future growth plans.
SMCI stock has been actively buying back its shares outstanding, reducing the share count from 51 million in 2019 to 53 million in 2023.
Lower shares outstanding combined with rising net income has led to exponential growth in earnings per share. EPS has jumped from $1.44 in 2019 to $12.09 in 2023.
In summary, SMCI’s industry-leading product portfolio targeting high-growth segments, operating leverage from scaling revenues, and shareholder return programs like buybacks have compounded to drive massive stock price appreciation over the past 5 years.
An investor who had the foresight to invest $10,000 in SMCI stock back in February 2019 would be sitting on an investment worth $366,383 today. This represents an incredible return of 3,664%, turning a modest $10,000 investment into over $360,000 in just 5 years!
SMCI’s growth trajectory remains strong going forward. With demand for high-performance servers still increasing and SMCI’s new product pipeline, the company is poised for continued success.
Any investor looking for a high-growth stock with multi-bagger return potential over the next 5 years would do well to consider Super Micro Computer. The next $10,000 invested in SMCI stock today could make you a fortune down the road!