SMCI Bounces 8% as Earnings Loom and Shorts Ease

Super Micro Computer makes AI server infrastructure, and after a brutal month that knocked the stock down 19%, it has clawed back 8% this week to $35.09, with earnings due on 3 November.

Short sellers have been quietly stepping back. Short interest now accounts for 14.1% of the free float, down 13% over the past month from a peak above 16%. The retreat has been steady rather than panicked: shares short fell from roughly 95 million in late September to 84 million by Tuesday. Borrowing costs remain low at 0.49%, and availability is relatively loose at 267%, well off the tightest reading of 85% seen over the past year. There is no squeeze dynamic here. Shorts are covering into earnings, but the borrow market is giving them no reason to rush.

Options traders have turned slightly more constructive too. The put/call ratio has drifted down to 0.77, a touch below its 20-day average of 0.79, the lowest it has been in over a month. The week before, the ratio was running at 0.84. That shift is modest but consistent with the direction of short covering: the most defensive positioning has unwound heading into the 3 November print.

The Street's view is more layered. Rosenblatt raised its target to $57 last week, the most bullish figure in the coverage universe. But the mean analyst target of $43.27 still implies roughly 23% upside from here, a gap that reflects genuine disagreement rather than consensus enthusiasm. Goldman Sachs holds a Sell with a $34 target, essentially at Monday's low. Citigroup and Mizuho sit at Neutral with targets of $45 and $43 respectively. The argument dividing them is familiar: the bull case centres on a record $60 billion backlog, more than two-thirds of it pure AI, and revenue pre-announced at $18.5 billion to $19.5 billion for the first fiscal quarter, up 280% year-on-year at the midpoint. The bear case is that Q1 gross margin is guided back to 10.4% to 10.8% after a non-recurring benefit flattered the Q4 figure, an unresolved export-control review tied to China shipments remains open, and low-margin EMS competition keeps structural pressure on profitability. Valuation is not stretched: the trailing P/E is around 6.5, and EV/EBITDA runs near 4.7. ORTEX factor scores flag strong earnings momentum, with 90-day EPS revision momentum at the 95th percentile of the universe, and an earnings yield rank in the 90th percentile. The short score of 59 remains elevated, placing the stock near the bearish end of the range.

On insider activity, the pattern over the past two months is uniformly one-directional. CEO Charles Liang and director Sara Liu Liang have each sold 100,000 shares on two occasions since early September, at prices ranging from $36.60 to $45.02, for a combined $24.4 million in net disposals. All transactions were executed under pre-arranged 10b5-1 plans, which reduces their informational weight. Still, the stock is now trading below the lowest price at which those plan sales were executed, a mechanical detail worth noting as the company approaches its next quarterly update.

Peer performance this week adds context. DELL and HPE both rose around 8% to 9%, matching SMCI's rebound almost exactly. The recovery looks broad rather than SMCI-specific. INFQ outperformed, rising 12%.

The last two earnings prints produced first-day gains of 20% and 6%. The next report on 3 November will test whether the export-control overhang and margin guidance trajectory have shifted enough to sustain the recovery or whether the stock gives back the week's gains once the actual numbers are in.