Super Micro sinks as Q4 results, Q1 outlook falls short

Super Micro Computer (NASDAQ:SMCI) sank 14% during early post-market trading after the data storage company presented its fourth quarter fiscal 2025 financial results on Tuesday.

The San Jose-based company reported fourth-quarter results and a first-quarter outlook that fell short of estimates. However, its full-year fiscal 2026 revenue projection was nearly $3B more than the estimate, as much of its revenue appears to be back-weighted for the year.

For the quarter ended June 30, Super Micro reported adjusted earnings per share of $0.41, which was less than the consensus estimate of $0.44. GAAP EPS was $0.31 compared to the estimate of $0.34.

Revenue totaled $5.8B, which was less than the estimate of $5.9B. Adjusted gross margin came in at 9.6% versus the estimate of 10%.

Looking ahead, the memory maker expects a first quarter fiscal 2026 adjusted EPS ranging from $0.40 to $0.52, with a midpoint of $0.46 much less than the estimate of $0.59. The company expects net sales ranging from $6B to $7B, with a midpoint of $6.5B less than the estimate of $6.59B.

However, for the entirety of fiscal year 2026, Super Micro projects net sales of at least $33B, which is nearly $3B more than the estimate of $30.03B.

“With support from our expanding global operations that help mitigate tariffs and regional costs, combined with a growing enterprise customer base, AI product innovations, and robust DCBBS-powered total solutions, we’re on track to grow more large-scale datacenter customers from four in FY25 to six to eight in FY26,” said Super Micro CEO and founder Charles Liang.

Seeking Alpha analyst Julian Ostian pointed out falling gross margin and earnings per share are not as strong as they used to be.

“Q4 showed a small rebound in revenue to $5.8B, but it doesn’t make me change my mind from last quarter,” Ostian said. “Gross margin fell again to 9.5%, profits are well below last year, and EPS is still miles away from what it used to be, and that’s during the AI boom. The cash flow this quarter is impressive, but it doesn’t fix the fact that profitability is razor-thin. Pricing power is not only not improving, but getting weaker. Guidance for Q1 looks like more of the same, while the full-year target of $33B+ feels ambitious to put it mildly. My main concerns from last time, like shrinking margins, execution risk, and management’s selective openness, are still right here.”

“Overall, AI demand is pushing Super Micro’s top line, but not fast enough,” added Seeking Alpha analyst Brett Ashcroft Green. “Gross margins continue to shrink, now down to 9.5% from 10.2% in the same quarter year over year. I’ve expressed this in previous articles; this is AI-related but not a high-value add product. Competition will push margins lower, as the winner here will need to race to the bottom the fastest regarding price. Don’t expect NVIDIA-like margins out of SMCI if we’re just talking about server racks. Volume and demand will need to increase at a faster pace if the company expects to grow its earnings. This has shifted from hope for higher margins to hope for higher turnover ratios. At least the de-listing saga seems to be in the rear-view.”