Tech stocks got whacked in 2022 — but one server maker soared almost 90%, beating all its peers

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In a tumultuous year for tech stocks, a relatively small Silicon Valley server company called Supermicro outperformed them all.

"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.", who has implemented strong internal financial controls since taking the job in early 2021.

"Silicon Valley enables us for better technology, faster time to market, and quick service, quick maintenance of our customer," Liang said. In the latest quarter, 45% of Supermicro's revenue came from enterprise sales, including AI and machine learning products. 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.Among analysts, there's some skepticism that the company can hit its targets in a softer economic environment.

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.

 

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On October 4, 2018, Bloomberg Businessweek published a report, citing unnamed corporate and governmental sources, which claimed that the Chinese People's Liberation Army had forced Supermicro's Chinese sub-contractors to add microchips with hardware backdoors to its servers.

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