Super Micro (SMCI) Stock Tumbles as Company Misses Earnings

Super Micro Computer Misses Q1 Estimates But Raises Outlook Amid AI Server Boom

Super Micro Computer (NASDAQ: SMCI) reported disappointing first-quarter results, missing analyst estimates on both earnings and revenue. Shares dropped more than 9% in premarket trading Wednesday following the announcement.

**Quarterly Results Fall Short**
The AI server maker posted earnings of $0.35 per share, falling short of the $0.40 per share expected by analysts. Revenue came in at $5.02 billion—significantly below the projected $6 billion. This miss occurred despite Super Micro issuing preliminary results last month to prepare investors.

Year-over-year, revenue declined 15% from $5.94 billion. Net income plunged by more than half to $168.3 million, or $0.26 per share, compared with $424.3 million in the prior year period.

**Revenue Delay Due to Customer Design Changes**
Super Micro attributed the shortfall to configuration changes requested by a high-volume customer. These design adjustments for GPU racks pushed approximately $1.5 billion in expected first-quarter revenue into the second quarter. CEO Charles Liang explained, “The delays were largely caused by the complexity of these new graphics processing unit racks, which require intricate integration, testing, and validation.”

**Challenges in AI Server Margins**
While Super Micro has benefited from the AI infrastructure boom—bolstered by its partnership with Nvidia and access to the new Blackwell Ultra GPU series—margin concerns remain. J.P. Morgan analysts noted that profit opportunities have lagged behind revenue growth in the AI compute space, with server makers sacrificing margins to secure high-value deals. Susquehanna analysts echoed these concerns, pointing out that deep price discounts to secure GB300 orders and an ongoing pursuit of lower-margin business have strained Super Micro’s financial metrics as competition intensifies.

**Raised Guidance Surprises Wall Street**
Despite the Q1 miss, Super Micro raised its outlook for upcoming periods. The company now expects second-quarter revenue of $10 to $11 billion, above the $7.83 billion analyst consensus. Full-year revenue guidance was also increased to at least $36 billion, up from the previous forecast of $33 billion.

**Stock Performance and Valuation**
Super Micro shares have gained nearly 56% year-to-date. The company currently trades at a price-to-earnings ratio of 16.94, compared to 9.75 for Hewlett Packard Enterprise and 14.11 for Dell Technologies.

**Looking Ahead**
The company’s ability to deliver on its raised guidance will be closely watched, particularly as the competitive and margin pressures in the AI server market remain intense. Super Micro’s partnership with Nvidia and its position at the forefront of next-generation GPU infrastructure leave it well-placed for future growth, but investors are watching to see if profitability can catch up with revenue gains.

*Super Micro Computer issued preliminary earnings about two weeks before this report, warning that quarterly revenue would drop to $5 billion—down from an earlier guidance of $6 to $7 billion. With Q1 numbers now out, attention shifts to execution in the coming quarters and whether Super Micro can balance growth with profitability in a rapidly evolving market.*
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