Has the growth myth of Super Micro Computer been shattered? Significant downward revision of revenue guidance, "price war" threatens profit margins, plummeting 16% after hours | Earnings Report Insights
Super Micro Computer's revenue for the fourth fiscal quarter was $5.76 billion, and adjusted earnings per share were $0.41, both below market expectations. The operating profit margin for the next quarter is expected to be only 5%, significantly lower than the analysts' expectation of 7%. The revenue forecast for fiscal year 2026 has also been revised down from the previous $40 billion to $33 billion, a decrease of 17.5%. The company's stock price fell over 16% in after-hours trading
Super Micro Computer plummeted 16% after hours, with the latest financial report once again reminding investors that even the "darling" of the AI wave cannot escape the harsh realities of business.
On Tuesday after hours, Super Micro Computer's fourth-quarter report failed to surprise investors. Revenue was $5.76 billion, a year-on-year increase of 7.5%, and adjusted earnings per share were $0.41, both below market expectations.
Even more concerning is the weak guidance. The company expects next quarter's revenue to be between $6 billion and $7 billion, significantly lower than analysts' expectations. Here are the key points from the financial report:
- Financial Performance: Fourth-quarter revenue was $5.76 billion, a year-on-year increase of 7.5%, but below analysts' expectations of $6.01 billion. Adjusted earnings per share were $0.41, also below the expected $0.44.
- Significant Downgrade in Expectations: The company expects next quarter's revenue to be between $6 billion and $7 billion, with adjusted earnings per share between $0.40 and $0.52. The revenue forecast for fiscal year 2026 has been downgraded from $40 billion to $33 billion, a decrease of 17.5%.
- Profitability Under Pressure: The company expects an operating profit margin of only 5% next quarter, far below analysts' expectations of 7%.
- Core Challenges: Facing intense price competition, especially pressure from Dell; difficulties in handling old inventory.
- Business Dilemma: Customers are waiting for the latest NVIDIA chip products, affecting current product demand.
CEO Charles Liang stated:
The company expects the supply situation for new AI semiconductors to improve compared to the past two quarters . However, whether this improvement can translate into actual revenue growth and a rebound in profit margins still highly depends on changes in the competitive environment and the progress of inventory clearance.
Super Micro Computer's stock price has soared 88% this year, but this disappointing performance and a significant downgrade in future guidance quickly cooled the market's enthusiasm, with the company's stock price crashing over 16% in after-hours trading.
(Super Micro Computer's stock plummets 16% after earnings)
Dual Dilemma of Compressed Profit Margins
The significant deterioration in Super Micro Computer's profitability is what worries the market the most.
The company expects an operating profit margin of only 5%, far below analysts' expectations of 7%. This gap reflects the dual pressures faced by Super Micro Computer:
On one hand, there is the issue of inventory backlog. The company is still dealing with inventory based on older technology, while customers are waiting for new products equipped with the latest NVIDIA chips.
CEO Charles Liang acknowledged during the earnings call:
Some customers are waiting for new products with the latest NVIDIA chips, which affects the demand for current products.
On the other hand, there is pricing pressure. To win large AI server orders against competitors, the company has been forced to accept lower prices This situation is not unique to Super Micro Computer—reports indicate that Dell Technologies has also accepted narrower profit margins to secure large orders like those from xAI.
The Core of the Expectation Gap: From High Growth to Price Wars
The most striking aspect is the significant downward revision of revenue expectations.
Super Micro Computer has cut its revenue forecast for fiscal year 2026 from a previously ambitious $40 billion to $33 billion, a decrease of 17.5%. It is worth noting that in February of this year, the company provided this optimistic target, which was nearly double the analysts' expectations, due to strong demand for AI products.
The company's 88% increase this year is largely built on the market's optimistic expectations for the AI boom, but the actual commercialization process has clearly been more tortuous than anticipated.
Bloomberg Intelligence analyst Woo Jin Ho candidly pointed out that the company's outlook suggests "a highly competitive pricing environment, particularly competition from Dell."
Super Micro Computer's predicament reveals the complexities of investing in AI infrastructure. Despite strong overall demand for AI, the reality faced by hardware suppliers is: rapid technological iteration, customers waiting for the latest products, and intensified competition leading to price wars.
