Super Micro Computer Sees Major Growth Inflection in 2H FY2026: Analyst Upgrade

Super Micro Computer's 4Q FY2025 earnings report showed a reality check for investors, with the company's stock down 20%. Despite this, guidance implies a major growth inflection in 2H FY2026, leading to a rating upgrade. The company's performance was lower than expected, but it is expected to rebound in the second half of the fiscal year.

Super Micro Computer, Inc. (SMCI) reported its fiscal fourth quarter (Q4) 2025 earnings, which fell short of analysts' expectations. The company reported net sales of $5.76 billion, missing estimates by $156 million. The adjusted earnings per share (EPS) also fell short, at 41 cents compared to the expected 45 cents per share [1]. Despite this, the company's Chief Executive, Charles Liang, highlighted the progress made in fiscal 2025, noting that the company's AI solution leadership in neoclouds, cloud service providers (CSPs), enterprises, and sovereign entities fueled a 47% annual growth. Liang also expressed excitement about the new Datacenter Building Block Solutions (DCBBS), which offer exceptional value to customers seeking faster data center deployment and time-to-online advantages [1].

The earnings miss has led to a significant drop in SMCI's stock price, with the shares tumbling 18.3% to close at $46.79 on Wednesday, August 5, 2025 [1]. Despite the earnings miss, KM Capital believes the market's reaction is excessive and advises shareholders to hold firm. The investment firm points to robust AI demand from cloud giants and SMCI's strengths in server systems compatible with NVIDIA hardware as reasons for optimism. The recent pullback has reset SMCI's valuation to a "buying opportunity" range, with a projected P/E ratio of 12 and a P/S ratio of 0.85 by 2028 [2].

SMCI is on track to increase its large-scale data center customers from four in fiscal 2025 to six to eight in fiscal 2026, according to Liang. The company's stock is currently trading between its 52-week range of $17.25 to $66.44, with a price-to-earnings (P/E) ratio of 29.6x, suggesting a premium valuation relative to its near-term earnings growth potential [2].

For the current quarter, SMCI guided to adjusted earnings of 46 cents per share on sales of $6.5 billion, based on the midpoint of its outlook. Wall Street was modeling earnings of 59 cents per share on sales of $6.63 billion in the fiscal first quarter ending September 30. For the current fiscal year ending next June, Supermicro expects to generate sales of at least $33 billion [1].

Despite the recent earnings miss, analysts are optimistic about the company's future growth prospects. The company's guidance for the second half of fiscal 2026 implies a major growth inflection, leading to a rating upgrade. While the first half of the fiscal year may be challenging, the second half is expected to see a significant rebound in revenue and earnings. This growth is expected to be driven by large-scale shipments of GB200 systems for NVIDIA's Blackwell and the launch of Data Center Building Block Solutions (DCBBS), which management expects could account for 30% of the company's growth in 2H FY2026 [3].

References:
[1] https://www.investors.com/news/technology/supermicro-stock-smci-fiscal-q4-2025-earnings/
[2] https://www.investing.com/news/transcripts/earnings-call-transcript-super-micro-computer-q4-2025-earnings-miss-expectations-93CH-4171697
[3] https://seekingalpha.com/article/4814400-super-micro-computer-guidance-implies-major-growth-inflection-2h-fy2026-rating-upgrade