Super Micro Computer, Inc.SMCINASDAQ

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

DCF Valuation

DCF Valuation Summary

Strong Buy

Fair Value: $282.46 per share(market-calibrated)

+838.1%

Upside to Fair Value

Current

$30.11

Pure Model

$299.17

Fair Value

$282.46

Bull Case

$451.92

Bear Case

$189.70

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: $299.17.

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 $231.73/share (19.6x terminal FCF) while exit multiple gives $366.61/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)78.91%

Debt Weight (D/V)21.09%

WACC Calculation

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

WACC = (78.91% × 11.35%) + (21.09% × 0.36%)

= 9.03%

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	0.917	0.771	0.649	0.546	0.421
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%

WACC9.03%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$253.1B

PV of Terminal Value$106.6B

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$186.7B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$30.6B

PV of Terminal Value$106.6B

Enterprise Value$137.2B

(-) Net Debt-$391M

Equity Value$137.6B

Shares Outstanding594M

Price per Share$231.73

Exit Multiple Method

PV of Projected FCFs$30.6B

PV of Terminal Value$186.7B

Enterprise Value$217.3B

(-) Net Debt-$391M

Equity Value$217.6B

Shares Outstanding594M

Price per Share$366.61

Pure Model Fair Value

$299.17

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%
7.03%	$381.07	$399.24	$422.93	$455.13	$501.44
8.03%	$325.77	$336.48	$349.70	$366.40	$388.19
9.03%	$284.16	$291.02	$299.17	$309.03	$321.19
10.03%	$251.13	$255.78	$261.17	$267.48	$274.99
11.03%	$223.98	$227.27	$231.00	$235.28	$240.25

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

$189.70

530.0% vs current

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

Base Case

$299.17

893.6% vs current

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

Bull Case

$451.92

1400.9% 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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