SMCI: short of explanations

Thesis for short trade in SMCI

Supermicro makes large servers. They do not command the same market share as HP or Dell. They survived a Bloomberg hit piece a few years ago which falsely claimed a Chinese supply chain attack with weak evidence.

  • Buying started mid January on strong sales reports
  • Recently joined the SPX
  • SMCI has risen around 300% in just six months (AI hype train + momentum in tech)
  • AI GPUs need servers to live in, so NVDA action is bullish for server manufacturers
  • Retail FOMO explains a lot of px movement in NVDA / AMD but SMCI is not a household name and the bullish trend is unexplained.
  • Their servers are not trash – they have good products but they’re not an AI company
  • Why hasn’t Equinix stock shot up too? Servers need to be hosted somewhere…
SMCI 6 months / 8 hour candles. Jan 19th was the strong earnings report. DELL, HPE, NVDA and NDX shown alongside.

Trade: short SMCI, exit at $770, stop loss at $1160, hedge NDX futures

I am bearish NDX and therefore very bearish tech stocks that don’t make sense.