TLDR:
- Super Micro’s stock dropped 15-18% after forecasting Q3 revenue of $4.5-4.6 billion, far below analyst expectations of $5.4 billion
- Adjusted EPS guidance of $0.29-0.31 missed Wall Street’s expected $0.53
- Company blamed “delayed customer platform decisions,” possibly related to Nvidia’s transition from Hopper to Blackwell chips
- GAAP and adjusted gross margins fell by 220 basis points quarter-over-quarter
- The stock has now fallen over 75% from its March 2024 peak of around $123
Super Micro Computer, once heralded as an AI darling, is facing a severe market reaction after announcing disappointing preliminary third-quarter results. The server maker’s stock plunged 15-18% in after-hours trading, putting it on track for its worst single-day performance since February.
The company’s preliminary guidance shocked investors. Super Micro expects revenue between $4.5 billion and $4.6 billion for the March quarter, significantly below Wall Street’s anticipated $5.4 billion.
Adjusted earnings per share are projected at just $0.29-$0.31, compared to analyst expectations of $0.53.
This marks a striking reversal for SMCI, which had been riding high on the artificial intelligence boom. The stock peaked at around $123 in March 2024 but has since shed over 75% of its value.
What Caused the Miss?
Super Micro attributed the earnings shortfall to “delayed customer platform decisions.” This likely relates to Nvidia’s transition between chip generations.
Many of Super Micro’s servers house Nvidia chips. Customers may be postponing purchases until they can install Nvidia’s newer Blackwell processors instead of the older Hopper hardware.
This explanation didn’t seem to reassure investors, who sent the stock tumbling below the $30 mark in after-hours trading.
Profitability metrics added to the gloomy picture. Both GAAP and adjusted gross margins declined by 220 basis points from the previous quarter.
The margin compression stems from product mix shifts and inventory-related write-downs. The company also cited increased spending on bringing new platforms to market.
A Challenging Year
This isn’t the first challenge SMCI has faced recently. The company has weathered questions about its accounting practices over the past year.
Its former auditor resigned in October, triggering another sharp decline in share price. Since then, Super Micro has appointed a new auditor.
An independent investigation found no evidence of fraud or misconduct, according to the company. However, this latest earnings miss has rekindled investor concerns.
Prior to this announcement, SMCI had been showing signs of recovery. The stock had gained 18% year-to-date before the preliminary results were released.
The volatility isn’t new for SMCI shareholders. It was the most volatile stock in the S&P 500 throughout 2024.
If current losses hold into regular trading, the stock will open around $30 on Wednesday. This would mark its largest one-day drop since February 27.
Management has tried to frame these delays as temporary issues. They’ve suggested that sales have simply shifted from Q3 into Q4, rather than being lost entirely.
Investors remain skeptical. Many are now waiting for fourth-quarter results to determine whether this is just a temporary stumble or the beginning of a longer-term decline.
For now, caution prevails as Super Micro struggles to maintain its growth narrative amid intense competition in the AI infrastructure space.
The latest guidance puts additional pressure on management to deliver in the coming quarter and restore investor confidence in the company’s long-term prospects.
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