Tech stocks got whacked in 2022 — but one server maker soared almost 90%, beating all its peers
Charles Liang, CEO, Super Micro
Source: Supermicro
It’s been a brutal year for tech stocks. The Nasdaq is headed for its worst slump since 2008 and is poised to underperform the S&P 500 for a second straight year. Among mega-cap tech stocks, Amazon, Meta and Tesla have each lost at least half their value.
Investors looking for some sign of optimism can turn to a 29-year-old server maker located in the heart of Silicon Valley. Shares of Super Micro Computer have soared 89% in 2022, topping all other U.S. tech companies valued at $1 billion or more. Supermicro has a market cap of $4.4 billion, up from $2.4 billion at the start of the year.
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Supermicro manufactures computers and sells them to companies, which use them as servers for websites, data storage and applications like artificial intelligence algorithms. In the low-margin server business, Supermicro competes with Dell, IBM and Hewlett Packard Enterprise as well as lesser-known players such as China’s Inspur. According to estimates from The Next Platform, Supermicro had about 2.6% of the market in 2021.
Supermicro has sought to differentiate itself in the market by allowing customers to more easily customize their computers. That makes for a more profitable offering than off-the-shelf servers.
The strategy has been working. Supermicro reported 46% growth in its fiscal 2022, which ended in June, to $5.2 billion in revenue. Earnings per share climbed to $5.32 in 2022 from $2.09 in 2021 and $1.60 the year before that.
“The stock is actually just simply mirroring the EPS increases we have seen over two years,” said Nehal Chokshi, an analyst at Northland Capital Markets who recommends buying the stock. Chokshi has a price target of $165, by far the highest among five analysts tracked by FactSet.
Supermicro closed on Tuesday at $82.89.
Chokshi said that Supermicro’s profitability and growth have been strong enough that it might deserve a larger multiple. Yet even with this year’s rally, the stock is only trading at 8.6 times earnings over the next 12 months, which is lower than its five-year average of 9.5, according to FactSet. For the past 12 months, it trades at 10.1 times earnings, down from a five-year average of 17.8.
“There still hasn’t been multiple expansion,” Chokshi said. “A lot of investors, including myself, find that befuddling, because this is a name that has historically generated 20-plus percent revenue and EPS growth that’s trading only at 10 [times] earnings.”
Across the board, investors have taken a hatchet to tech multiples, reflecting concerns that soaring inflation and rising interest rates will dampen enthusiasm for growth stocks for the foreseeable future. The Nasdaq currently trades for 26 times earnings, compared with its five-year average of 35, according to FactSet.
Supermicro shares started rising in July and continued going up in August, after the company’s annual earnings report. They soared another 30% in November, after Supermicro showed a nearly 80% increase in year-over-year sales for the September quarter to $1.85 billion.
Manufacturing servers involves putting many different parts together. Supermicro starts with one of its own motherboards, plugs in a processor from Intel or AMD, or a graphics processor from Nvidia, and adds a power supply, RAM, networking and whatever other parts the computer might need. Supermicro will sell the client the motherboard, a fully assembled server, or an entire rack of servers.
Heading into 2023, the outlook for the server market is murky, especially in the early part of the year. Companies are tightening their belts, and likely to spend less on capital expenditures. Supermicro’s revenue growth is expected to moderate to about 32% in fiscal 2023 and 9% the following year.
But the company has at least regained the support of Wall Street after a rough stretch in the middle of the last decade. From 2015 through 2017, Supermicro had misstated financial statements and published some key filings late, according to the SEC.
“They have done a marvelous job of coming back,” said Susquehanna’s Mehdi Hosseini, who has a hold rating on the stock. “I would say they’re the comeback story of 2022. And that’s what’s reflected in the share price. But the management team has to remain very aggressive with their target.”
The comeback, according to Hosseini, is partially driven by confidence in CFO David Weigand, who has implemented strong internal financial controls since taking the job in early 2021.
“They became compliant with SEC filings in 2020, and it’s just been straight line up,” Hosseini said. “They have done really well.”
Bigger customers
Supermicro CEO Charles Liang told CNBC that the company’s recent performance reflects the size of the business and its ability to offer a wider array of products, particularly around customization.
While the company has been rapidly expanding in Taiwan, one component of its differentiation strategy, Liang said, is its San Jose, California, headquarters, where Supermicro still does the majority of its manufacturing.
Liang said it’s more expensive to build locally than overseas but doing so allows the company to be physically closer and more responsive to the chip companies it supplies as well as major customers like cloud providers and big websites.
“Silicon Valley enables us for better technology, faster time to market, and quick service, quick maintenance of our customer,” Liang said.
He said tech companies can move faster with Supermicro servers and are willing to pay for execution and the company’s design skills.
One area of notable growth is machine learning, or AI algorithms that require a large amount of computing power, usually centered around graphics processors made by Nvidia or AMD. Supermicro makes motherboards and systems that can combine up to eight GPUs together on a single board.
In the latest quarter, 45% of Supermicro’s revenue came from enterprise sales, including AI and machine learning products.
Another specialized market Supermicro is targeting is servers for 5G or telecom applications, using a new kind of approach called OpenRAN.
Supermicro is targeting $8 billion to $10 billion in revenue for fiscal 2024. To reach that goal, the company says it needs substantial growth from AI products and has to sell more complete systems, or servers already installed in a rack.
Current growth is being driven by Supermicro’s large data center business, which has been landing bigger accounts and comprised 50% of total sales in the September quarter, according to a November note from Wedbush analyst Matt Bryson, who has a neutral rating on the stock.
Supermicro said in November that a big unnamed customer was responsible for nearly 22% of the company’s sales in the quarter. In recent years, Supermicro had no single customer accounting for more than 10% of its sales.
‘Far more cautious’
Among analysts, there’s some skepticism that the company can hit its targets in a softer economic environment.
Susquehanna’s Hosseini said he recently downgraded the stock “because I think they will face headwinds in the next year” and the “growth targets are too aggressive.”
Intel and AMD have issued downbeat prospects for the server market, and companies of all sizes are cutting costs.
“While we applaud the quarter, we are far more cautious when thinking about Supermicro’s intermediate to longer term path and in particular view the company’s now stated goal of $8 billion to $10 billion in revenues in 2024 with trepidation given the headwinds noted above,” Wedbush’s Bryson wrote.
Analysts at Evercore said in a note this month that they expect server market revenue growth to slow to about 2.7% globally in 2023 from 13.5% last year. Server makers like Supermicro need to carry a lot of inventory and may face margin pressure if sales slow.
Northland’s Chokshi said that Supermicro’s strengths, especially in AI systems, could allow it to weather a market downturn better than its rivals.
“While their competitors are showing strong signs that there is a significant capex down cycle, their results are accelerating,” Chokshi said. “So far, they’re showing no signs of this cycle catching up to them.”
Liang is confident that Supermicro can continue to gain new customers, even if growth slows from its recent torrid pace.
“In a good year, growth will be around 80%,” he said. “In a bad year, hopefully 20%.”
WATCH: Tech stock expectations are coming down but not fast enough
Xpeng CEO He Xiaopeng speaks to reporters at the electric carmaker’s stand at the IAA auto show in Munich, Germany on September 8, 2025.
Arjun Kharpal | CNBC
Germany this week played host to one of the world’s biggest auto shows — but in the heartland of Europe’s auto industry, it was buzzy Chinese electric car companies looking to outshine some of the region’s biggest brands on their home turf.
The IAA Mobility conference in Munich was packed full of companies with huge stands showing off their latest cars and technology. Among some of the biggest displays were those from Chinese electric car companies, underscoring their ambitions to expand beyond China.
Europe has become a focal point for the Asian firms. It’s a market where the traditional automakers are seen to be lagging in the development of electric vehicles, even as they ramp up releases of new cars. At the same time, Tesla, which was for so long seen as the electric vehicle market leader, has seen sales decline in the region.
Despite Chinese EV makers facing tariffs from the European Union, players from the world’s second-largest economy have responded to the ramping up of competition by setting aggressive sales and expansion targets.
“The current growth of Xpeng globally is faster than we have expected,” He Xiaopeng, the CEO of Xpeng told CNBC in an interview this week.
Aggressive expansion plans
Chinese carmakers who spoke to CNBC at the IAA show signaled their ambitious expansion plans.
Xpeng’s He said in an interview that the company is looking to launch its mass-market Mona series in Europe next year. In China, Xpeng’s Mona cars start at the equivalent of just under $17,000. Bringing this to Europe would add some serious price competition.
Meanwhile, Guangzhou Automobile Group (GAC) is targeting rapid growth of its sales in Europe. Wei Haigang, president of GAC International, told CNBC that the company aims to sell around 3,000 cars in Europe this year and at least 50,000 units by 2027. GAC also announced plans to bring two EVs — the Aion V and Aion UT — to Europe. Leapmotor was also in attendance with their own stand.
There are signs that Chinese players have made early in roads into Europe. The market share of Chinese car brands in Europe nearly doubled in the first half of the year versus the same period in 2024, though it still remains low at just over 5%, according to Jato Dynamics.
“The significant presence of Chinese electric vehicle (EV) makers at the IAA Mobility, signals their growing ambitions and confidence in the European market,” Murtuza Ali, senior analyst at Counterpoint Research, told CNBC.
Tech and gadgets in focus
Many of the Chinese car firms have positioned themselves as technology companies, much like Tesla, and their cars highlight that.
Many of the electric vehicles have big screens equipped with flashy interfaces and voice assistants. And in a bid to lure buyers, some companies have included additional gadgets.
For example, GAC’s Aion V sported a refrigerator as well as a massage function as part of the seating.
The Aion V is one of the cars GAC is launching in Europe as it looks to expand its presence in the region. The Aion V is on display at the company’s stand at the IAA Mobility auto show in Munich, Germany on September 9, 2025.
Arjun Kharpal | CNBC
This is one way that the Chinese players sought to differentiate themselves from legacy brands.
“The chances of success for Chinese automakers are strong, especially as they have an edge in terms of affordability, battery technology, and production scale,” Counterpoint’s Ali said.
Europe’s carmakers push back
Legacy carmakers sought to flex their own muscles at the IAA with Volskwagen, BMW and Mercedes having among the biggest stands at the show. Mercedes in particular had advertising displayed all across the front entrance of the event.
BMW, like the Chinese players, had a big focus on technology by talking up its so-called “superbrain architecture,” which replaces hardware with a centralized computer system. BMW, which introduced the iX3 at the event, and chipmaker Qualcomm also announced assisted driving software that the two companies co-developed.
Volkswagen and French auto firm Renault also showed off some new electric cars.
Regardless of the product blitz, there are still concerns that European companies are not moving fast enough. BMW’s new iX3 is based on the electric vehicle platform it first debuted two years ago. Meanwhile, Chinese EV makers have been quick in bringing out and launching newer models.
“A commitment to legacy structures and incrementalism has slowed its ability to build and leverage a robust EV ecosystem, leaving it behind fast moving rivals,” Tammy Madsen, professor of management at the Leavey School of Business at Santa Clara University, said of BMW.
While European autos have a strong brand history and their CEOs acknowledged and welcomed the competition this week in interviews with CNBC, the Chinese are not letting up.
“Europe’s automakers still hold significant brand value and legacy. The challenge for them lies in achieving production at scale and adopting new technologies faster,” Counterpoint’s Ali said.
“The Chinese surely are not waiting for anyone to catch-up and are making significant gains.”
Marc Benioff is keeping an eye on Palantir.
The co-founder and CEO of sales and customer service management software company Salesforce is well aware that investors are betting big on Palantir, which offers data management software to businesses and government agencies.
“Oh my gosh. I am so inspired by that company,” Benioff told CNBC’s Morgan Brennan in a Tuesday interview at Goldman Sachs‘ Communacopia+Technology conference in San Francisco. “I mean, not just because they have 100 times, you know, multiple on their revenue, which I would love to have that too. Maybe it’ll have 1000 times on their revenue soon.”
Salesforce, a component of the Dow Jones Industrial Average, remains 10 times larger than Palantir by revenue, with over $10 billion in revenue during the latest quarter. But Palantir is growing 48%, compared with 10% for Salesforce.
Benioff added that Palantir’s prices are “the most expensive enterprise software I’ve ever seen.”
“Maybe I’m not charging enough,” he said.
It wasn’t Benioff’s first time talking about Palantir. Last week, Benioff referenced Palantir’s “extraordinary” prices in an interview with CNBC’s Jim Cramer, saying Salesforce offers a “very competitive product at a much lower cost.”
The next day, TBPN podcast hosts John Coogan and Jordi Hays asked for a response from Alex Karp, Palantir’s co-founder and CEO.
“We are very focused on value creation, and we ask to be modestly compensated for that value,” Karp said.
The companies sometimes compete for government deals, and Benioff touted a recent win over Palantir for a U.S. Army contract.
Palantir started in 2003, four years after Salesforce. But while Salesforce went public in 2004, Palantir arrived on the New York Stock Exchange in 2020.
Palantir’s market capitalization stands at $406 billion, while Salesforce is worth $231 billion. And as one of the most frequently traded stocks on Robinhood, Palantir is popular with retail investors.
Salesforce shares are down 27% this year, the worst performance in large-cap tech.
Salesforce and Palantir year to date stock chart.
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