Super Micro’s Stock (NASDAQ: SMCI) Under Pressure as Guidance Cut

Super Micro Computer's stock (NASDAQ: SMCI) is trading down 5.71% in this morning's pre-market, as the company reported mixed earnings for the quarter. While the company narrowly surpassed earnings per share (EPS) expectations with a non-GAAP EPS of $0.31, a significant revenue miss ($4.6 billion vs $5.05 billion) and downward revisions to full-year guidance triggered volatility in the stock.

Revenue marked a 19% sequential decline, even as year-over-year growth remained robust at 19.5%. Gross margins contracted to 9.7%, down 220 basis points, as the company faced competitive pricing pressures and higher upfront costs related to its next-generation liquid cooling technologies, an area SMCI is betting on for future growth.

The revenue miss was attributed to delayed customer orders, particularly in AI infrastructure projects. Many enterprises have postponed critical server platform decisions amid ongoing macroeconomic uncertainties.

CEO Charles Liang characterized these delays as temporary, expressing confidence that deferred orders would materialize in coming quarters. Nonetheless, the company revised its fiscal 2025 revenue guidance downward to $21.8–$22.6 billion, from a prior range of $23.5–$25 billion.

Q4 guidance was similarly cut, with projected revenues of $5.6–$6.4 billion and non-GAAP EPS of $0.40–$0.50, both below analyst expectations.

What Comes Next for SMCI?

Despite near-term turbulence, SMCI’s long-term strategy remains focused on capitalizing on secular AI and hyperscale computing trends. The company is aggressively expanding its manufacturing footprint, investing in new facilities in Silicon Valley and Southeast Asia to address supply chain bottlenecks and improve production scalability. These investments, coupled with a focus on energy-efficient, liquid-cooled server solutions, are aimed at capturing a larger share of the $250 billion global server market.

AI infrastructure remains a bright spot for SMCI, with AI GPU platforms contributing 70% of Q3 revenues and liquid cooling solutions projected to account for 30% of 2025 shipments. Recent sector tailwinds have provided some support to SMCI’s stock, though competitive pressures from rivals like Dell and Hewlett Packard Enterprise continue to weigh on margins.

Wall Street remains divided on SMCI’s prospects. Bank of America recently downgraded the stock to “Neutral” citing margin sustainability concerns, while Morgan Stanley maintained an “Overweight” rating, emphasizing SMCI’s first-mover advantage in AI-optimized servers.

The consensus 12-month price target of $46.85 implies a potential upside of over 50% from current levels, though this reflects heightened volatility expectations.

Analysts project a 34% compound annual growth rate for SMCI’s revenues through 2026, driven by continued demand for AI and edge computing infrastructure. The company’s conservative balance sheet (debt-to-equity ratio of 0.15) and ongoing operational efficiencies provide some cushion against near-term headwinds.

Those with a high risk tolerance may find SMCI’s current valuation interesting at current levels, yet if history is any guide, further volatility can be expected.