Super Micro Computer, Inc.SMCINASDAQ

Overview Intelligence Charts News Fundamentals Key Metrics TTM Financials Earnings Growth Rating Analysts Institutional Peers Historical

DCF Valuation

DCF Valuation Summary

Strong Buy

Fair Value: $278.89 per share(market-calibrated)

+776.2%

Upside to Fair Value

Current

$31.83

Pure Model

$294.91

Fair Value

$278.89

Bull Case

$444.61

Bear Case

$187.14

Market Reality Check

Model Terminal Growth

3.75%

Market-Implied Growth

0.50%

Calibrated Growth

2.61%

Fair value uses 65% model / 35% market-implied terminal growth. Pure model: $294.91.

What's Driving This Ratingfor SMCI

✓

CapEx already efficient

CapEx at 0.36% of revenue is already at or below sector maintenance level. No normalization needed — cash conversion is already strong.

↑

Margin expansion modeled

Current EBIT margin is 6.95% — below the sector mature average of 25.00%. Model expands margins as the business scales and operating leverage kicks in. Year 10 EBIT reaches $15.7B (20.27% margin).

⚠

Analyst growth decelerates sharply

Revenue growth drops from 84.18% in Year 1 to 3.75% by Year 5 (per analyst consensus). This growth deceleration is a key reason the model may undervalue the stock if growth re-accelerates.

↔

Perpetuity and exit methods disagree

Perpetuity growth gives $226.44/share (19.3x terminal FCF) while exit multiple gives $363.38/share (34.4x terminal FCF). The 28x EV/EBITDA exit reflects current market multiples, while the perpetuity method with 3.75% growth is more conservative. The base case averages both methods.

🎯

Market pricing in lower growth than model

The market implies only 0.50% perpetual growth — 325bps below the model's 3.75%. This suggests the market sees headwinds or risks not in the model.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 81.43% indicates efficient cash generation. FCF reaches $12.9B by Year 10 (16.65% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)1.52

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)11.35%

Cost of Debt

Pre-tax Cost of Debt0.41%

Tax Rate13.01%

After-tax Cost of Debt0.36%

Equity Weight (E/V)79.81%

Debt Weight (D/V)20.19%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (79.81% × 11.35%) + (20.19% × 0.36%)

= 9.13%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$40.5B	$55.7B	$64.4B	$69.3B	$77.4B
EBIT	$2.8B	$3.9B	$6.8B	$10.9B	$15.7B
Tax	$366M	$503M	$885M	$1.4B	$2.0B
NOPAT	$2.4B	$3.4B	$5.9B	$9.5B	$13.7B
+ Depreciation	$71M	$98M	$113M	$122M	$136M
- Capex	$144M	$198M	$230M	$247M	$276M
- Δ NWC	$4.1B	$1.7B	$517M	$557M	$622M
Free Cash Flow	-$1.7B	$1.6B	$5.3B	$8.8B	$12.9B
Discount Factor	0.916	0.769	0.646	0.542	0.417
Present Value	-$1.6B	$1.2B	$3.4B	$4.8B	$5.4B

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$12.9B

Terminal Growth Rate3.75%

WACC9.13%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$248.4B

PV of Terminal Value$103.6B

Exit Multiple Method

Year 10 EBITDA$15.8B

Exit Multiple (EV/EBITDA)28.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$443.3B

PV of Terminal Value$185.0B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$30.4B

PV of Terminal Value$103.6B

Enterprise Value$134.0B

(-) Net Debt-$391M

Equity Value$134.4B

Shares Outstanding594M

Price per Share$226.44

Exit Multiple Method

PV of Projected FCFs$30.4B

PV of Terminal Value$185.0B

Enterprise Value$215.3B

(-) Net Debt-$391M

Equity Value$215.7B

Shares Outstanding594M

Price per Share$363.38

Pure Model Fair Value

$294.91

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	2.75%	3.25%	3.75%	4.25%	4.75%
7.13%	$374.68	$391.83	$414.04	$443.96	$486.42
8.13%	$321.10	$331.32	$343.86	$359.63	$380.06
9.13%	$280.53	$287.11	$294.91	$304.31	$315.86
10.13%	$248.19	$252.67	$257.85	$263.91	$271.10
11.13%	$221.52	$224.70	$228.31	$232.44	$237.21

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$187.14

487.9% vs current

• -25% vs analyst consensus
• Terminal growth: 3.3%
• Beta: 1.90

Base Case

$294.91

826.5% vs current

• Analyst consensus
• Terminal growth: 3.8%
• Beta: 1.52

Bull Case

$444.61

1296.8% vs current

• +25% vs analyst consensus
• Terminal growth: 4.3%
• Beta: 1.29

Key Assumptions & Drivers• Technology Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth84.18%

Year 3 Revenue Growth15.40%

Year 5 Revenue Growth3.75%

Year 7 Revenue Growth3.75%

Year 10 Revenue Growth3.75%

Terminal Growth Rate3.75%

Margin & Efficiency

Current EBIT Margin6.95%

Terminal EBIT Margin25.00%

Tax Rate13.01%

Historical Capex / Rev0.36%

NWC / Revenue22.22%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 28x EV/EBITDA (Technology sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

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