SMCI’s Building AI Forts in Europe… But Can They Fortify It Before Dell and Amazon Storm the Walls?

Before Super Micro became one of the most talked-about names in AI infrastructure, it was best known for something a little less flattering: allegedly helping the Chinese government spy on Apple and Amazon. (Not exactly the kind of thing you put on your company homepage.)

In 2018, Bloomberg Businessweek published what might go down as one of the most dramatic tech articles of the decade… accusing Chinese operatives of sneaking rice-sized spy chips onto Super Micro motherboards. The report claimed these rogue chips made their way into data centers at Apple, Amazon, and other big names. Super Micro denied it. Apple denied it. Amazon denied it. Even the U.S. government basically said “we got nothing.” But the damage was done. Within weeks, SMCI’s stock tanked over 40%, erasing more than $1 billion in market value.

Customers ran for the hills. Confidence evaporated overnight. And just when things couldn’t get worse, Super Micro got booted from the Nasdaq in 2018 for failing to file financials on time (not exactly the best look when people already think you’re secretly working for the communist government).

So the company went into full damage control. We’re talking about third-party audits. Supply chain overhauls. And a steady drip of corporate statements that essentially screamed, “We are not spies, please come back.” Then in 2023 the story completely flipped. OpenAI’s ChatGPT went viral (what a time to be on Twitter).  Nvidia’s H100 chips became more sought-after than Bitcoin at peak mania. And suddenly, the entire world needed GPU-packed servers that could handle large-scale AI workloads without melting.

Super Micro was built for this moment. While legacy players like Dell and HPE were still finalizing product plans, Super Micro was producing custom server racks at warp speed. Thanks to a just-in-time manufacturing strategy and its longtime partnership with Nvidia (the AI world’s sugar daddy, as I like to call it), SMCI suddenly became the name to call when you needed racks of AI-ready servers… yesterday.

The numbers speak for themselves. Fiscal 2024 revenue surged 110% to $14.9 billion. In Q2 FY25, its server and storage segment grew another 19% year-over-year. And in March 2024, SMCI stock hit an all-time high of over $1,000 per share, pushing its market cap above $60 billion. (Remember, this is the same company that couldn’t get an analyst to return its calls five years earlier.) But hype is a double-edged GPU.

After joining the S&P 500 in early 2024, SMCI became a magnet for index funds, retail hype, and momentum traders with diamond hands and zero attention span. Then came the gut check: In April, shares dropped 18% after Super Micro issued soft guidance for Q3, blaming delayed orders as customers waited on Nvidia’s next-gen hardware. Classic “hurry up and wait” scenario. If that wasn’t enough, the company also delayed its FY2024 annual report… an echo of past financial reporting issues that investors would rather forget. They eventually filed in February, but by then, the damage was done. The stock is now down about 46% from its highs. Still, it’s up more than 60% year-to-date. In other words, you either timed it perfectly and look like a genius… or you bought the top and are now explaining to your spouse why “this is part of the plan.”

(Source: MarketWatch)

But CEO Charles Liang isn’t blinking. The man’s been running Super Micro since Jurassic Park was in theaters (1993, for the record), and he’s treating this AI wave like it’s just getting started. In a recent interview, Liang confirmed the company’s doubling down on global growth… starting with expanded manufacturing in Europe. “The demand is global,” he said. “And the demand will continue to improve in [the] next many years.”

If you’re wondering “why Europe?” The reason is pretty simple: demand there is exploding. Nvidia CEO Jensen Huang has been making the rounds, urging European governments and enterprises to build out their AI infrastructure like their digital future depends on it (it kind of does). And unlike the U.S., where AI data centers are already popping up faster than vape shops in a college town, Europe still has a ton of untapped runway.

Super Micro already has a plant in the Netherlands, but Liang plans to scale manufacturing across Europe. The logic is simple: build servers closer to where they’re needed, ship faster, and lock in customers before the Dells and Amazons of the world can slide in with bulk discounts and golf invites. And so far, it’s working. SMCI now owns 9% of the $145 billion AI platform market and just inked a $20 billion partnership with Saudi Arabia’s DataVolt. In response, Raymond James analyst Simon Leopold initiated a Buy rating on the stock and sees major upside ahead.

But not everyone’s convinced. Citi and Barclays are still warning about tighter margins, execution risk, and the fact that Nvidia, Dell, Microsoft, and Amazon are all ramping up their in-house server builds. (In other words: “Thanks for building the blueprint. We’ll take it from here.”)

In my view, Super Micro’s definitely walking a tightrope here. Demand is strong, expectations are even stronger, and the competition (Dell and Nvidia) is closing in fast. But I still think they’ve got a real edge. Their ability to move quickly, customize at scale, and ship ahead of the pack gives them a strategic advantage. And in a market as important (and fast-moving) as AI infrastructure, that head start isn’t something you can easily replicate.

At the time of publishing this article, Stocks.News holds positions in Apple, Amazon, Microsoft, and Dell as mentioned in the article.