Super Micro’s Stock (SMCI) Tumbles: Earnings Miss, EPS Guidance Weak

Super Micro Computer's stock (NASDAQ: SMCI) is getting punished this pre-market, after the company reported earnings that fell short of Wall Street expectations. The stock is currently trading at $47.40, down 17.22% from the previous close, reflecting investor concerns over near-term profitability despite robust long-term revenue projections.

Super Micro's Q4 results revealed revenue of $5.8 billion, slightly below the consensus estimate of $5.91 billion. Non-GAAP earnings per share (EPS) came in at $0.41, missing the anticipated $0.44. This shortfall, coupled with a decline in gross margin to 9.5% from 10.2% in the same quarter last year, has fueled concerns about the company's ability to maintain profitability amidst increasing competition and supply chain challenges. Net income for the quarter also saw a decrease, falling from $297 million in Q4 FY2024 to $195 million.

Future Outlook and Guidance

Looking ahead, Super Micro's guidance for the first quarter of fiscal year 2026 further tempered expectations.

The company projects net sales between $6.0 billion and $7.0 billion, with GAAP net income per diluted share of $0.30 to $0.42 and non-GAAP EPS of $0.40 to $0.52. This falls short of analyst consensus for Q1 2026 non-GAAP EPS, which stands at $0.59, despite revenue consensus being at $6.55 billion.

Despite the disappointing quarterly results and near-term outlook, Super Micro maintains a bullish stance on its long-term growth potential.

The company anticipates fiscal year 2026 revenue of at least $33 billion, significantly exceeding the current analyst consensus of $29.79 billion.

CEO Charles Liang emphasized the company's progress in AI solution leadership and the value proposition of its new Datacenter Building Block Solutions (DCBBS), which aim to accelerate datacenter deployment and time-to-online advantages for customers.

“We made solid progress in FY25 by growing our AI solution leadership in Neoclouds, CSPs, Enterprises, and Sovereign entities, which fueled our 47% annual growth. I'm especially excited about our new Datacenter Building Block Solutions, which offer exceptional value to customers seeking faster datacenter deployment and time-to-online advantages.”

Analyst Ratings and Technicals

However, analysts remain divided on the company's prospects. Bank of America downgraded the stock to “Hold” from “Buy,” citing concerns over declining margins and competitive pressures. Barclays maintained a “Buy” rating but reduced the price target to $693 from $1,000, highlighting the impact of margin headwinds on the company's profitability.

Super Micro's ability to execute its strategic initiatives, expand its customer base, and navigate the competitive landscape will be crucial in determining its future success. While the company's long-term revenue projections remain robust, the near-term challenges and earnings miss have raised concerns among investors, leading to a decline in the stock price and a more cautious outlook. The company's next earnings report and subsequent guidance will be closely watched for signs of improvement and a potential rebound in investor confidence.