Shares of Nebius jumped about 10% premarket on Wednesday, while Nvidia was largely flat.

The Dutch AI infrastructure provider said the partnership will help it deploy more than 5 gigawatts of Nvidia systems by the end of 2030.

The companies will collaborate on — AI factory design and support: including access to partner design material, design review processes and acceptance; Inference: creating an inference and agentic AI stack for developers and enterprises with Nvidia’s software technologies, models, and libraries.

The two will also team up on deploying multiple generations of Nvidia infrastructure across Nebius’s platform through early adoption of Nvidia computing architectures, including Nvidia’s Rubin platform, Nvidia Vera CPUs, and Nvidia BlueField storage systems.

“Nebius is building an AI cloud designed for the agentic era, fully integrated from silicon to software and powered by NVIDIA’s next-generation accelerated compute,” said Nvidia’s Founder and CEO Jensen Huang.

In January, Nvidia (NVDA) invested $2B in Nebius’ rival CoreWeave (CRWV) and expanded their collaboration to help CoreWeave accelerate the buildout of over 5 gigawatts of AI factories by 2030.

Nebius, CoreWeave, and Supermicro (SMCI) are set to provide Nvidia’s Vera Rubin graphics processing units this year.

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This agreement, signed at MWC26, aims to speed up AIDC construction and reduce supply issues by using the combined knowledge of the three companies.

Both the firms will work on a pre-fabricated modular model that combines AI servers with necessary power and cooling systems in a single unit. This method allows for quicker construction and cost savings compared to the traditional approach.

In addition, modules can be added as needed, making it easier to adjust to changing market demand without heavy initial costs.

Under the MOU, SK Telecom will provide AIDC operational expertise, Supermicro will supply high-performance AI servers, and Schneider Electric will handle MEP infrastructure design and construction.

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Morgan Stanley kept its Equal-weight rating and $99 price target on the stock.

“Q4 revenues up 110% YoY to $1.6B represent unprecedented scaling within our coverage, targets of $30B in ARR exiting FY27 and 8GWs of active power exiting FY30 show mgmt’s confidence in the TAM. However, a reset of FY26 margin expectations strikes at the heart of the CRWV debate, keeping us EW,” said analysts led by Keith Weiss.

The analysts noted that targeting adjusted operating income at $900 to $1.1B, suggesting operating margins of 8% at the mid-point, fell well below consensus expectations of 21% operating margins in 2026.

The analysts added that the compounded fourth quarter margins coming in light of expectations strike at the heart of the investor debate on CoreWeave: “What are the durable margins of this business?”

The analysts said that CoreWeave’s management’s explanation of timing differences between the delivery of powered shells, provisioning of graphics processing units, or GPUs, and the monetization of those GPUs appeared at odds with the team’s assertion that it gets GPUs up and running faster than any other provider in the market and left them with more questions than answers.

“Bottom line, if investors can gain confidence in the durable margin profile of CoreWeave being in line with management’s mid-20s target, the stock currently well under prices the potential FCF [free cash flow] associated with a ramp to >$80 billion in ARR [Annual Recurring Revenue] over the next 5 years. However, we remain on the sidelines at EW, awaiting more clarity on the unit economics of this rapidly scaling GPUaaS [GPU as a Service] business and the potential for software (including the recent partnership with Nvidia) to tilt the margin equation more positively,” said Weiss and his team.

Evercore maintained its Outperform rating but lowered the price target on the stock to $150 from$160.

Analysts led by Amit Daryanani said that CoreWeave reported a top-line beat in the fourth quarter as demand remained robust. However, the analysts noted that fourth quarter operating income ($88M versus Street at $133M) and EBITDA ($898M versus consensus at $929M) came in below consensus as ramp-up/installation costs related to an uptick in capacity coming online weighed on profitability.

“While the ramp dynamics will create noise around margins near term as CRWV adds more capacity, we note that the overall demand backdrop remains robust and believe CRWV remains well-positioned to capture an outsized share of the AI cloud opportunity. Furthermore, we see potential for upside from 1) monetization of software stack, 2) continued ramp up/installation period management, and 3) upsell of other cloud solutions (CPU, storage),” said Daryanani and his team.

Related stocks: Nebius (NBIS) fell about 7%, while Super Micro Computer (SMCI) rose around 2% on Friday.

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Upgrades

• Super Micro Computer (SMCI): Upgrade Hold to Buy by Envision Research. The analyst believes SMCI’s recent selloff has fully accounted for near-term negatives, with massive investments in inventory and accounts receivable signaling a hyper-growth phase that should boost future cash flow.

“In terms of valuation, the combination of stock price pullbacks and updated EPS guidance has made SMCI attractively valued both in absolute terms and also in relative terms…in the near term, I expect the changes in revenue recognition and inventory to start boosting the company’s cash flow and also helping its margins in the meantime.”

• Etsy (ETSY): Upgrade Sell to Neutral by Gary Alexander. Etsy is showing signs of recovery with a return to GMS growth in Q4 and a “back to basics” strategy highlighted by the sale of Depop to eBay for $1.2 billion.

“Etsy’s recent correction over the past few months, which has erased most of 2025’s gains, has positioned the stock at a much more favorable valuation to achieve a rebound rally. The company has additional fuel from a recovery in GMS and revenue trends.”

Downgrades

• Western Digital (WDC): Downgrade Neutral to Sell by Gary Alexander. Despite strong 25% year-over-year revenue growth, the analyst warns that the AI-driven storage boom may be peaking and the company’s valuation is too rich relative to its margin profile and competitors.

“To me, all of Western Digital’s strengths are priced in, and I’m downgrading the stock now to a sell. … The major AI hyperscalers are accelerating their AI purchases into the current timeframe in order to race to build out AI applications. This doesn’t mean that this level of capex will be sustained in perpetuity.”

• Chipotle Mexican Grill (CMG): Downgrade Buy to Hold by Daniel Jones. While fundamentally strong, Chipotle faces pressure from a 2.5% decline in comparable restaurant sales and rising labor and occupancy costs as younger and lower-income consumers cut back spending.

“Given the worsening results on the bottom line that we saw during the final quarter and my own view that economic conditions are deteriorating in the US in a way that is pointing toward a recession, I think that downgrading the stock to a ‘hold’ is appropriate. … If the stock were cheaper, I would feel differently.”

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Management View

• Charles Liang, Founder, Chairman, President & CEO, emphasized that “Super Micro delivered a strong fiscal Q2 as AI infrastructure demand continues to accelerate across every major customer segment.” Liang highlighted record revenue of $12.68 billion for the quarter, driven by AI solutions and the growing adoption of the Data Center Building Block Solution (DCBBS). Liang noted that “DCBBS will significantly help us gain market share in large, medium and small AI infrastructure deployments” and expects DCBBS profit contribution to grow to double digits by the end of calendar 2026. He outlined ongoing product expansion, including upcoming NVIDIA Vera Rubin and AMD Helios solutions, and stressed DCBBS as a focal point for the company’s fourth phase of product evolution.

• Liang detailed operational strategies to enhance profitability amid near-term margin pressures, stating, “We are also sharpening our focus on traditional enterprise, cloud and edge IoT customers to further diversify revenue with higher margin.” He identified modularized subsystems, increased automation, and global manufacturing footprint expansion as key drivers for long-term margin improvement.

• David Weigand, Senior VP, CFO, reported, “We achieved record Q2 fiscal year ’26 revenue of $12.7 billion, up 123% year-over-year and up 153% quarter-over-quarter compared to our guidance of $10 billion to $11 billion.” He added, “AI GPU platforms, which represent over 90% of Q2 revenue, continue to be the key growth driver.” Weigand also noted a shift in revenue mix, with OEM appliance and large data center segment revenue now representing 84% of Q2 revenue.

Outlook

• The company guided for Q3 net sales of at least $12.3 billion and full-year 2026 revenue of at least $40 billion. Liang stated, “I’m confident to guide at least $12.3 billion for Q3 and up our full year revenue guidance back to at least $40 billion.”

• Weigand indicated, “We expect gross margins to be up 30 basis points relative to Q2 FY ’26 levels.” GAAP diluted net income per share for Q3 is projected at least $0.52, and non-GAAP diluted net income per share at least $0.60.

• The company expects capital expenditures for Q3 in the range of $70 million to $90 million.

Financial Results

• Q2 revenue reached $12.7 billion, with approximately $1.5 billion attributed to delayed Q1 shipments. Non-GAAP gross margin for Q2 was 6.4% versus 9.5% in Q1. Non-GAAP operating expenses were $241 million, making up 1.9% of revenue. Q2 GAAP EPS was $0.60, and non-GAAP diluted EPS was $0.69.

• Order strength remained robust from global large data center and enterprise customers, with one large data center customer representing approximately 63% of total revenue. U.S. revenue accounted for 86% of Q2 revenue, up 184% year-over-year.

• Operating cash flow used in Q2 was $24 million, a significant improvement from $918 million in the prior quarter. Inventory rose to $10.6 billion, up from $5.7 billion in Q1, in preparation for continued shipment strength.

Q&A

• Ananda Baruah, Loop Capital: Asked about margin trajectory and operational leverage. Liang responded, “The customer mix, we are improving quarter after quarter…that will improve our profitability.” He added that as products mature, expedite costs will be reduced, and “DCBBS also increasing for our — for our gross margin.”

• Unknown Analyst, JPMorgan: Inquired about the conservatism in full-year guidance. Liang indicated, “I believe we say minimum $40 billion is a relatively conservative number…our business indeed will continue to grow.”

• Asiya Merchant, Citi: Asked about supply constraints and DCBBS ramp. Liang stated, “If the shortage situation improve quickly, for sure, our…revenue will be more than that.”

• Katherine Murphy, Goldman Sachs: Asked about DCBBS investments and margin profile. Liang explained, “Gross margin — net margin are much higher for DCBBS because it’s so unique…the margin is much better, for sure, more than 20%.”

• Ruplu Bhattacharya, BofA: Sought clarification on cost impacts and customer mix. Weigand replied, “Costs were up in each of those areas,” but did not provide specific breakout figures. Liang confirmed component shortages are due to high demand.

• Quinn Bolton, Needham: Asked about customer concentration. Liang noted increasing diversification and fast growth, while acknowledging that customer schedules can shift.

Sentiment Analysis

• Analysts raised concerns about margin pressures, customer concentration, and supply constraints, with a slightly negative to neutral tone. Questions focused on sustainability of growth, margin improvement, and the impact of DCBBS.

• Management maintained a confident and slightly optimistic tone, frequently emphasizing improvement and growth. Liang used phrases such as “I’m confident” and “very happy to see more and more customers like DCBBS.” During Q&A, management reiterated focus on operational efficiency, margin improvement, and customer diversification.

• Compared to the previous quarter, analysts showed increased focus on gross margin trajectory and customer mix, while management’s confidence appeared bolstered by strong top-line growth and DCBBS momentum.

Quarter-over-Quarter Comparison

• Revenue guidance increased from at least $36 billion to at least $40 billion for the full year. Q2 revenue of $12.7 billion substantially outpaced the prior quarter’s $5 billion.

• Non-GAAP gross margin declined from 9.5% in Q1 to 6.4% in Q2, pressured by customer mix and expedite costs. Operating expenses rose in dollar terms but fell as a percentage of revenue.

• Management’s tone shifted from cautious optimism in Q1 to increased confidence in Q2, particularly regarding large-scale AI deployments and DCBBS adoption. Analysts’ focus shifted from backlog and capacity to margin sustainability and customer diversification.

Risks and Concerns

• Management cited ongoing component shortages, volatile pricing, tariffs, and supply chain disruptions as challenges impacting gross margins and revenue growth.

• The company acknowledged that large customer concentration poses risk but is being addressed by efforts to diversify the customer base and expand DCBBS offerings.

• Analysts expressed concerns regarding the sustainability of margin improvement and the potential impact of further supply constraints or customer order shifts.

Final Takeaway

Super Micro Computer delivered record Q2 results and raised its full-year revenue guidance to at least $40 billion, supported by rapid AI infrastructure growth and strong momentum in DCBBS adoption. Management emphasized ongoing investments in product innovation, global manufacturing, and margin improvement strategies, while addressing near-term challenges from supply constraints and customer concentration. The company expects margin expansion in upcoming quarters, driven by a maturing customer mix and increasing DCBBS contributions, and remains confident in its ability to capture new business and support higher growth into the second half of fiscal 2026.

Read the full Earnings Call Transcript

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For the period ending Dec. 31, Super Micro said it earned an adjusted $0.69 per share as revenue more than doubled year-over-year to come in at $12.53B. Analysts had expected the company to earn an adjusted $0.40 per share on $10.43B in revenue.

“With our leading AI server and storage technology foundation, strong customer engagements, and expanding global manufacturing footprint, we are scaling rapidly to support large AI and enterprise deployments while continuing to strengthen our operational and financial execution,” said Super Micro CEO Charles Liang in a statement. “Our DCBBS, Data Center Building Block Solutions, enable customers to scale faster, greener, and at lower cost, Supermicro is well positioned to capture the next wave of AI and IT infrastructure demand.”

Looking ahead to the fiscal third-quarter, Super Micro said it expects to earn at least $0.60 per share on an adjusted basis, with revenue of at least $12.3B. Analysts had expected adjusted earnings of $0.52 per share and $10.25B in revenue.

Super Micro also upped its full-year outlook and now expects revenue to be at least $40B, up from a prior view of at least $36B.

The company will host a conference call at 5 p.m. EST to discuss the results.

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Wall Street expects the San Jose, Calif.-based company to post an EPS of $0.49 and revenue of $10.34B for the quarter.

SMCI’s CEO Charles Liang, during its Q1 earnings call, said that the company expects net sales in the range of $10B to $11B for Q2 fiscal 2026 and net sales of $36B for FY2026.

Analysts are cautious about SMCI due to concerns over the company’s gross margin pressure, shipment delays, volatile operations, and low profit margins despite strong AI infrastructure demand.

KeyBanc Capital Markets rated SMCI as Sector Weight, saying that SMCI could raise revenue guidance above $36B (60%+ y/y), but the brokerage firm is concerned that gross margins are likely flat at best from ~6.5% levels, suggesting limited gross profit dollar growth.

Wall Street analysts and Seeking Alpha’s Quant remain cautious, rating the stock Hold and Sell, respectively.

Seeking Alpha analyst Gytis Zizys highlighted that SMCI’s Q2 guidance suggests robust demand, with a $13B+ backlog and potential for further expansion, but margin contraction overshadows topline momentum.

However, Zizys still rated the stock Hold, warning about persistent margin pressures and unresolved accounting concerns, despite strong AI-driven revenue growth.

Over the last two years, SMCI has beaten EPS estimates 63% of the time and has beaten revenue estimates 50% of the time.

Over the last three months, EPS estimates have seen three upward revisions versus 13 downward moves, while revenue estimates have seen 15 upward revisions and no downward revisions.

Shares in the company, which provides IT solutions for AI, cloud, storage, and 5G/Edge, have gained around 1.64% in the past year, underperforming the broader S&P Index, which has gained around 14.3% during the same period.

However, Seeking Alpha analysts are bullish, rating SMCI a Buy.

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