Super Micro Computer (SMCI) Stock: Revenue Soars Past $12B on AI Server Boom

TLDR

• Revenue hit $12.7 billion, crushing $10.42 billion estimate and up 123.4% year-over-year
• EPS of $0.69 beat consensus $0.49 by 40.8% in fiscal Q2
• Q3 guidance projects at least $12.3 billion revenue versus $10.25 billion estimate
• Full-year outlook raised to minimum $40 billion from $36.27 billion consensus
• Gross margin dropped to 6.4% from 11.9% last year, single client represents 63% of revenue

Super Micro Computer crushed expectations in its fiscal second quarter. The AI server provider reported numbers that left Wall Street scrambling to revise models.

Revenue reached $12.7 billion for the quarter ending December 31. Analysts expected $10.42 billion. The year-over-year comparison shows revenue more than doubling from $5.7 billion.

Earnings per share came in at $0.69 on an adjusted basis. That beat the Street’s $0.49 estimate by a wide margin. The 40.8% beat caught many by surprise.

Super Micro Computer, Inc., SMCI

CEO Charles Liang credited the company’s AI server technology and growing manufacturing presence. The firm is scaling operations to handle large AI deployments and enterprise customers.

Guidance Points to Continued Growth

The outlook for Q3 shows no signs of slowing. Management expects revenue of at least $12.3 billion. That’s well above analyst estimates of $10.25 billion.

Adjusted EPS guidance came in at a minimum of $0.60. The consensus had been $0.52. The company also lifted its full-year revenue forecast to at least $40 billion, topping the previous $36.27 billion estimate.

Barclays analysts praised the “beat and raise” performance. They noted strong customer demand driving results. But they highlighted a risk factor that investors should watch.

One customer accounted for roughly 63% of quarterly revenue. That level of concentration creates vulnerability. Management expects customer diversification to improve in the second half.

Profitability Concerns Emerge

Gross margin tells a different story. The metric contracted to 6.4% on an adjusted basis. Last year’s comparable quarter showed 11.9% gross margin.

The compression raises questions about pricing dynamics and product mix. As more competitors enter the AI server market, maintaining margins could get tougher.

The balance sheet shows $4.1 billion in cash as of December 31. Bank debt and convertible notes totaled $4.9 billion.

Wall Street remains divided on the stock. The consensus rating sits at “Hold” with an average price target of $46.19. Eight analysts recommend buying, eight say hold, and two rate it a sell.

Some firms bumped targets after earnings. Rosenblatt raised its price target to $55. Others moved the opposite direction. JPMorgan Chase lowered its target from $43 to $40.

Shares traded at $29.67 on Tuesday. The stock sits well below its 52-week high of $66.44. The market cap stands at $17.71 billion with a P/E ratio of 23.74.

The company’s cash position and debt load suggest a manageable financial structure. The current ratio of 5.39 indicates strong short-term liquidity.

Institutional investors own 84.06% of the company’s stock. Several hedge funds adjusted positions during recent quarters.

The results highlight growing demand for AI infrastructure across industries. Companies continue investing heavily in technology to support AI applications and data center expansion.

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