Zacks Rates Super Micro Hold as $6.7 Billion Free Cash Flow Turns Negative
Updated
Updated · Zacks Investment Research · Jun 11
Zacks Rates Super Micro Hold as $6.7 Billion Free Cash Flow Turns Negative
3 articles · Updated · Zacks Investment Research · Jun 11
Summary
Super Micro drew a Zacks Rank #3 Hold, with analysts urging investors to retain the stock until execution and cash-flow trends improve despite its discounted valuation.
Negative free cash flow of $6.7 billion and operating cash outflow of $6.6 billion in fiscal third quarter were driven by elevated inventory, lower accounts payable and rising receivables.
Inventory climbed to $11.1 billion from $10.6 billion in the prior quarter and $4.68 billion at fiscal 2025-end, while days inventory outstanding jumped to 106 from 63.
The caution comes even as AI demand remains strong: SMCI says GPU-related platforms generate more than 80% of quarterly revenue, software revenue rose to $46 million, and rack capacity is targeted above 6,000 per month by fiscal 2026-end.
Shares have fallen 32.4% over the past year and trade at 0.35 times sales versus the industry's 4.07, but analysts flagged customer concentration and stronger competition from Dell and HPE as ongoing risks.