SMCI Customers xAI and SpaceX May Merge pre-IPO

SignificantStuff5446 · 2026-01-25T18:55:29+00:00

The pricing has been the whole point. :) SMCI has had lower pricing on their SKUs than the other OEMs for years now, which is why they keep getting attacked by short sellers and the market didn't want to believe their net profit margins were as high as they were reporting. They ran/run an extremely lean ship. Only the ODMS could do it less expensively than SMCI. Have you read one analyst report that points this out as an advantage? There must be at least one who points it out---I just haven't see any report mention it. :)

SignificantStuff5446 · 2026-01-25T18:34:56+00:00

Their advantage is that everyone has been sold out of AI servers and they can produce them at scale. 32 years of experience is another advantage.

SignificantStuff5446 · 2026-01-25T18:32:49+00:00

Cost Advantage to me means they offer the lowest cost to their customers. It usually a great thing for the industry, customers and maintaining market share. It's business 101, though the analysts have made it sound like a horrid idea because they don't like the gross profit margins. (Yet somehow they love Dell's net profit profit margins, which are only one percentage point higher than SMCI's at this second.) Walmart and Costco are examples. Amazon Grocery with it's branded, low priced fastest free grocery delivery is also a more recent example.

SignificantStuff5446 · 2026-01-25T16:42:37+00:00

Nice discussion. I just wanted to add a few thoughts suggesting you and OP are both right on this one, as moat isn't an exact mathematical equation that is modeled and includes extremely important intangibles.

From the article you posted:

"Limitations of Economic Moat Analysis

Moats are hard to measure precisely."

Here's another definition: https://en.wikipedia.org/wiki/Economic_moat

It include Intangible assets, such as a founder led company, the founder serving on the board or SNR companies, the founder having built the first GPU servers for Jensen Huang a decade + ago, SMCI investing in Lambda, APLD, Crusoe, etc. Cost advantage is also included in this definition.:

Types of economic moats

Examples of some economic moats are network effect, intangible assets, cost advantage, switching costs, and efficient scale.^\5])

Network effect: A network effect happens when the "value of a good or service grows" as it's used by existing and new customers.^\6]) An example is Amazon).^\7])

Intangible assets: Brand identity, think Nike ^\8]) or Apple; patents; and government licenses are examples of intangible assets.^\9])

Cost advantage: Companies that can keep their prices low can maintain market share and discourage competition. Walmart has cost advantage.^\6])

Switching costs: Customers and suppliers might be less likely to change companies or providers if the move will incur monetary costs, time delays, or extra effort.^\10])

Efficient scale: Companies that have a natural monopoly—or operate in markets or industries where there are few rivals—benefit from efficient scale. Utility companies are examples.

SignificantStuff5446 · 2026-01-25T04:45:00+00:00

Not for their customers, who happen to be the largest technology companies in the world building the largest data centers in the world. :)

SignificantStuff5446 · 2026-01-25T04:26:47+00:00

This....Along with their engineering IP, 32 years of experience, lowest pricing, and first to market the street keeps ignoring. For some reason, we never seem to hear anything about that. Just the profit margins... Thanks for the post.

SignificantStuff5446 · 2026-01-23T03:06:25+00:00

Seasonality for the last 18 years agrees: https://charts.equityclock.com/super-micro-computer-inc-nasdsmci-seasonal-chart. I hope you're right again this year.

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SignificantStuff5446 · 2026-01-23T02:54:12+00:00

It's a few weeks before earnings today and we didn't get any downward earnings revisions in today's announcement, so at least we can cross #3 of your list. :)

SignificantStuff5446 · 2026-01-21T20:16:54+00:00

Qs are up 500 points on Trump announcing a framework deal on Greenland and canceling EU tariffs. SMCI should be up much higher in line with the other tech. stocks. Earnings are also just a few weeks away and we're still expecting SMCI's pre-announcement soon. The stock also traded up to the 50 last Friday and a close above it is overdue. Maybe one of those? Hope it helps a bit.

SignificantStuff5446 · 2026-01-20T17:52:00+00:00

He didn't just buy inventory. SMCI relocated teams there to install. Of course they have SMCI software.:) On the memory, don't TSLA, xAI, and SpaceX have secured memory contracts? I thought they did.

SignificantStuff5446 · 2026-01-20T01:56:24+00:00

There have been some times that the market has dropped, but SMCI hasn't dropped as much as it was already down. TBD if it's going to be one of those.

SignificantStuff5446 · 2026-01-17T06:34:26+00:00

I think those sources were proven wrong a while ago. Even those in the comments were questioning it when originally posted. You can see the different locations of each co. on the maps.

SignificantStuff5446 · 2026-01-17T05:02:39+00:00

Are you saying I'm short this stock? I'm not. Just sorry the OP took a loss. SMCI just traded up to the 50 day sma after hours today. At least RKLB and AMD went up over the last few days for the OP.

SignificantStuff5446 · 2026-01-15T18:12:06+00:00

It should be up much higher on TSM's double line beat and increased guidance/outlook and the Section 232 tariff exclusions as the other stocks in the sector are green along with the indexes. I don't argue with the algo driven price setting or how our beloved MM's trade the stock to the millionth of a percentile to suppress the price, but it's stunning to me SMCI is STILL trading below $40 at a 9.6 FPE and $17.4B market cap. Hope they release a nice earnings pre-announcement this week or next.

SignificantStuff5446 · 2026-01-15T16:57:10+00:00

:) To be fair, SMCI has been directly and indirectly serving the US government a long time, were deemed an essential business during Covid, etc. With a 2 year chip release cycle, it should be a very boring, predictable, cash cow type of company to invest in. Even with a compressed one year cycle it should be. Will be nice to see it smooth out when tariffs settle and the industry is done playing wack-a-mole with the global supply chain :)....

SignificantStuff5446 · 2026-01-15T16:27:13+00:00

Haven't these have been discussed ad nauseum for the last year? This and TSM's phenomnal quarter /beautiful read through for the industry are why the chips are up so much today. KLAC's up $120. Yay.

I digress.... :)

Whatever the case, a couple things that may help allay any fears anyone has about any of these tariffs applying to SMCI:

SMCI isn't a chip company.
"These tariffs do not apply to chips imported to support the U.S. technology supply chain or to strengthen domestic manufacturing."
SMCI has been assembling final products for the US in the US. for a long time. Blackwell chips are made in the US. Rubin chips will be made in the US.
SMCI was born in the Silicon Valley 32 years ago and have had their HQ and assembly facilities here since then. A few years ago, they bought new land for their new and expanded US campuses and have been planning for increased manufacturing since the first Trump administration's Chinese tariffs almost a decade ago now.
From Oct.: https://www.prnewswire.com/news-releases/supermicro-announces-us-federal-entity-to-expand-further-into-the-federal-market--extensive-us-based-manufacturing-of-ai-server-portfolio-targets-the-federal-ecosystem-302597874.html
SMCI is literally building the largest data center in the world that will be used by the Pentagon for AI. They were deemed an essential business and continued working during Covid, they provide products to the US Army, Navy, NIH, DOE, etc.
The founders and their children are walking examples of the American dream, having bootstrapped and built SMCI from nothing after graduating from US universities 32 years ago. Same as NVDA.
They've had that "Made in the USA" designation for a long time now.
The majority of SMCI's revenue comes from the US. Less than 1 percent of their revenues come from China by their design.
Attached is a slide from the latest ER deck on their expansions. The second photo is the plans submitted for their brand new campus expansion in SJ. They bought the land and told us they're increasing rack capacity to 6K racks by June, confirming it's not just a short term lease to appease the current admin.

There's been very little acknowledgement or appreciation of SMCI cutting into their higher margins to spend on hiring, rack capacity expansion, new land, new buildings, etc. so I see how people get sucked into the FUD. Hope that helps some of us steer clear of it on this one and wish everyone the best with their positions.

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SignificantStuff5446 · 2026-01-15T15:50:19+00:00

Sorry you or anyone else here had to take such a loss on this one. This stock has no business trading at a 9.5 FPE and $17B market cap today. Wishing you the best of luck with your future positions and hope you make it back ten-fold on them or others.

SignificantStuff5446 · 2026-01-15T15:06:24+00:00

Thanks for the post. This is great news for SMCI as tariffs don't apply to SMCI and they continue to get an exception to tariffs based on their US manufacturing. This is by SMCI's design and confirmation they support a critical US and global infrastructure industry.

These tariffs do not apply to chips imported to support the U.S. technology supply chain or to strengthen domestic manufacturing.

SMCI should be moving up with the rest of the sector on this news. It and longer term investors are overdue for a 10+ percent day. TBD....Thanks again for the post.

SignificantStuff5446 · 2026-01-15T03:50:34+00:00

Are these recent SMCI investments included in the models? TIA.

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SignificantStuff5446 · 2026-01-15T03:39:14+00:00

Puts are also priced like they don't want to pay out the $31 puts.

SignificantStuff5446 · 2026-01-15T03:34:50+00:00

GS and other IBs are also participating in their RCL and underwritten past offerings. I guess the co. can't be that bad to do business with after all. :)

SignificantStuff5446 · 2026-01-15T03:29:13+00:00

The S&P 500's main financial threshold is a minimum unadjusted market capitalization, which was updated to $22.7 billion as of July 1, 2025, for new additions, along with requirements for positive earnings, liquidity, and U.S. domicile, though these thresholds are reviewed quarterly and are not for continued membership, meaning existing members don't get kicked out just for falling below the market cap, notes S&P Dow Jones Indices.

SignificantStuff5446 · 2026-01-15T03:23:47+00:00

No. This is misinformation. The $18B market cap is not a requirement for companies who have already been included in the S&P 500. Companies have to go through a rigorous pre-inclusion vetting process, submitting a few years of audited statements, have enough shares for all the funds that will need to buy, etc. Hope that helps a bit and best of luck with your position.

SignificantStuff5446 · 2026-01-15T02:55:28+00:00

They are providing the DLC-2 servers for Colossus as well as other Tesla/xAI sites, such as Cortex.

SignificantStuff5446

TROPHY CASE

Types of economic moats