Jim Cramer Dumps Super Micro Computer (SMCI): “Not So Super – Go with Dell”
54min read Why Jim Cramer’s Turn Against SMCI Signals a Shift in Tech Infrastructure Plays
Jim Cramer, the outspoken host of CNBC’s Mad Money, has long been a vocal advocate for tech stocks, but his recent dismissal of Super Micro Computer (SMCI) marks a significant pivot in his strategy. In a sharp critique of the company’s valuation and execution, Cramer urged investors to “go with Dell” instead. This call reflects broader concerns about the AI infrastructure sector and highlights Dell’s resilience amid market turbulence. Let’s unpack the reasoning and data behind this recommendation.
Ask Aime: Why did Jim Cramer recommend switching from SMCI to Dell?
The Case Against Super Micro (SMCI): Overvalued and Overexposed
Cramer’s disdain for SMCI stems from its struggles to live up to its “Super” moniker. The company’s stock has plummeted 56.82% since early 2024, a decline he attributes to macroeconomic headwinds like high interest rates and accounting irregularities that dented investor confidence.
Ask Aime: Is Dell poised to gain from Cramer's SMCI sell-off?
Key Issues with SMCI:
- Margin Pressure: SMCI’s Q3 2025 results revealed a 220 basis point drop in gross margins, driven by inventory write-downs and rushed product launches.
- Delayed Sales: Customer hesitancy pushed sales into Q4, reflecting broader skepticism about AI’s cost efficiency (e.g., Chinese startup DeepSeek’s claims).
- Accounting Concerns: Cramer explicitly called SMCI a “sell” due to red flags in its financial reporting, a stance he rarely takes without concrete evidence.
The market’s reaction was swift: SMCI’s shares fell 19% after the weak Q3 report, dragging down AI stocks like NVIDIA (NVDA) and Broadcom (AVGO).
Ask Aime: Why Jim Cramer's Turn Against SMCI Signals a Shift in Tech Infrastructure Plays?
Why Dell (DELL) Emerges as the Safer Bet
Cramer’s bullish stance on Dell hinges on its enterprise-focused business model, diversified revenue streams, and better valuation metrics.
Dell’s Advantages:
- Enterprise Strength: Dell’s large enterprise component shields it from the volatility of consumer-facing AI hardware. Its Q1 2025 results outperformed Hewlett Packard (HPE), which admitted operational flaws and negative cash flow.
- Undervalued at 9x Earnings: Dell’s P/E ratio of 9x is a stark contrast to SMCI’s inflated multiples during its peak. Cramer called it a “bottom” at $91, arguing the stock had already priced in risks like tariffs and supply chain disruptions.
- Resilience Amid Tariffs: While Dell faces China exposure, its global footprint and enterprise contracts make it less vulnerable than SMCI to sudden policy shifts.
Hedge Fund Backing:
Dell is held by 63 hedge funds (as of Q4 2024), ranking it 7th on Cramer’s list of discussed stocks. This institutional support underscores its stability compared to SMCI, which ranked 6th but lacks Dell’s cash flow and execution track record.
The Broader AI Infrastructure Thesis: Overdone Selling?
Cramer’s recommendations are part of a broader thesis: the AI infrastructure sector has been overcorrected. While SMCI and peers like Arista Networks (ANET) face skepticism, he argues that corporations continue to invest billions in data centers.
Key Points:
- Corporate Spending: Major companies like Amazon, Microsoft, and Google are doubling down on AI infrastructure, even as public markets sour.
- Tariff Risks: Cramer acknowledges U.S.-China trade tensions but believes Dell’s valuation already accounts for these headwinds.
However, he cautions that “hated” stocks like NVIDIA (NVDA)—which have fallen ~25% since early 2025—may rebound, but Dell offers a safer entry point.
Conclusion: Dell’s Undervaluation Outweighs SMCI’s Risks
Jim Cramer’s dismissal of SMCI and endorsement of Dell reflect a strategic shift toward value over hype in the AI infrastructure space. SMCI’s struggles with margins, delayed sales, and governance concerns make it a risky bet, while Dell’s enterprise focus, 9x P/E ratio, and institutional backing position it as a resilient alternative.
The data is clear:
- SMCI’s stock is down 56.82% since early 2024, with further downside if margin pressures persist.
- Dell’s 30% decline from 2024 highs has created a buying opportunity at $91, offering a safer play on long-term AI adoption.
Investors should heed Cramer’s advice: dump SMCI and pivot to Dell. The latter’s fundamentals and valuation make it a far better bet in a sector where fear has outweighed fundamentals.
In a market rife with uncertainty, Dell’s stability—and SMCI’s vulnerabilities—are no longer debatable. The call to “go with Dell” is a prudent one.
