Starting the lightning round of Mad Money on September 28, a caller inquired about Super Micro Computer, Inc. (NASDAQ:SMCI), and Jim Cramer replied:
Okay, Super Micro is an inexpensive company; it looks like it. But I’d rather tell you I think there’s major structural problems internally in that. That’s why I like Dell, which has really been a monster.
Both companies are benefiting from heavy AI infrastructure spending. Super Micro generated $39.1 billion in fiscal 2026 revenue, up 77.8% year over year, while full-year gross margin declined to 10.8% from 11.1%. Dell Technologies Inc. (NYSE:DELL) generated $47 billion of revenue in the second quarter of fiscal 2027, up 58%, and raised its full-year revenue outlook to $192 billion.
Cramer’s preference for Dell comes as the two AI infrastructure rivals take very different paths: Dell has become one of his standout AI winners while Super Micro Computer (SMCI) is still trying to prove that surging demand can outweigh its legal andgovernance concerns.
Dell is Converting AI Demand Into Higher Profits
Dell Technologies Inc.’s Infrastructure Solutions Group generated $31.8 billion of second-quarter revenue, up 89%, including $16.4 billion from AI-optimized servers. AI-optimized server orders reached a record $60.9 billion, while backlog stood at $95 billion. Traditional servers and networking revenue increased 122% year over year. Its second-quarter operating income increased 204% to $5.4 billion, while operating cash flow reached $2.2 billion. Cash flow from operations totaled $6.3 billion during the first six months of fiscal 2027. Gross margin increased 260 basis points to 20.9%, with Dell attributing the quarterly improvement to disciplined pricing.
Super Micro Computer, Inc.’s fourth-quarter fiscal 2026 gross margin recovered to 17.5% from 9.9% in the previous quarter. CEO Charles Liang said the company generated more than $60 billion in new orders and entered fiscal 2027 with a record backlog. He also said Super Micro was improving profitability through a richer enterprise customer mix and broader adoption of its Data Center Building Block Solutions architecture. If you are looking for a cheaper AI stock, check out 10 Best AI Stocks to Buy Under $25.
Super Micro’s Growth is Absorbing Cash
Super Micro Computer, Inc.’s rapid expansion has required substantial working capital. Inventory reached $12.9 billion at the end of fiscal 2026, up from $4.7 billion a year earlier, while accounts receivable increased to $6.1 billion from $2.2 billion. Operating cash flow was negative $6.81 billion, compared with positive $1.66 billion in fiscal 2025. The company also recorded $188.1 million of inventory valuation write-downs during fiscal 2026. Super Micro raised $5.64 billion from equity offerings during the fourth quarter, adding another source of capital as its working-capital requirements increased.
The margin picture adds another pressure point. Super Micro’s fiscal-year gross margin fell to 10.8% from 11.1%, with the company attributing the decline primarily to competitive pricing, changes in product and customer mix, and higher manufacturing-related expenses. Dell Technologies Inc., by comparison, reported a 20.9% quarterly gross margin in its latest period.
Super Micro also entered fiscal 2027 with a material weakness in internal controls over financial reporting. The company said certain information-technology controls supporting financial reporting had not operated for a sufficient period and that controls for monitoring user access were not performed consistently and on time. BDO USA issued an adverse opinion on the effectiveness of Super Micro’s internal control over financial reporting as of June 30, 2026.
Hedge Funds Increased Exposure to Both Stocks
According to Insider Monkey’s tracking of more than 1,000 hedge funds, 62 hedge funds held Super Micro in Q2, up from 49 in Q1. Dell was held by 77 funds, up from 72. Meanwhile, short interest represented approximately 17% to 19% of Super Micro’s public float. On the other hand, Dell’s short interest was approximately 3.7% to 4.7% of its public float.
Super Micro Computer, Inc. has delivered faster revenue growth, but that growth has come with lower full-year gross margins, substantial working-capital needs, and an unresolved internal-control weakness. Dell Technologies Inc. is also committing significant capital to AI infrastructure, but its latest results show stronger margins and positive operating cash flow while AI orders and backlog continue to expand. Trading at a heavily discounted forward earnings multiple of 10.15x, SMCI’s valuation reflects deep market skepticism driven by governance overhangs and cash-flow friction. In comparison, Dell Technologies Inc. has a higher forward multiple of 21.32x as it commits significant capital to AI infrastructure, backed by stronger margins, positive operating cash flow, and expanding AI orders and backlog. Those fundamental contrasts help explain why Cramer contrasted Super Micro’s internal issues with what he called Dell’s “monster” performance.
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