Super Micro Computer's Earnings: A Closer Look Reveals a More Positive Outlook

Super Micro Computer's Q4 earnings were worse than expected, causing a 20% stock slide. Shares were at $58 before earnings, but the company reported disappointing results. Despite the decline, the stock has potential for recovery.

Super Micro Computer (SMCI) shares tumbled more than 20% on Wednesday following the release of the company's fiscal fourth-quarter (Q4) earnings report. The stock, which was trading at $58 before the earnings announcement, dropped to $46.50, marking a significant decline in investor sentiment. The earnings report revealed that SMCI's non-GAAP earnings per share (EPS) of $0.41 missed analysts' estimates by $0.03, while revenue of $5.8 billion missed expectations by $110 million [1].

The company's CEO, Charles Liang, attributed the quarterly weakness to tariffs and a revenue shortfall in June, which he described as a result of "specification changes from a major new customer" and a "lack of working capital" [2]. Despite these challenges, SMCI expects net sales of $6.0 billion to $7.0 billion for the first quarter (Q1) of fiscal year 2026, with non-GAAP earnings projected to range between $0.40 and $0.52 per share [3].

Analysts have responded to the earnings miss with a mix of caution and optimism. Bank of America analyst Ruplu Bhattacharya reiterated his "Underperform" rating on SMCI stock, citing continued pressure on gross margins and inventory reserves for older generation products [2]. Other Wall Street firms have maintained a "Hold" rating on SMCI stock, with a mean target of about $43, suggesting potential for further decline [2].

Despite the recent decline, some analysts believe that SMCI has potential for recovery. Wedbush analyst Matt Bryson maintained a Neutral rating with a price target of $30 on Aug. 4, 2025, while JP Morgan analyst Samik Chatterjee increased the price target from $35 to $46 on July 17, 2025 [1]. The company's gross margin is expected to improve modestly in Q4, with analysts attributing this to the delivery of higher-margin AI servers [3].

Investors will be closely watching the company's earnings call on August 5 for any commentary on gross margin trajectory or cost improvements. SMCI's ability to navigate the challenging landscape for AI hardware suppliers will be a critical factor in determining the stock's future performance.

References:
[1] https://www.benzinga.com/analyst-stock-ratings/price-target/25/08/46862679/super-micro-computer-likely-to-report-lower-q4-earnings-these-most-accurate-analysts-revise-forecasts-ahead-of-earnings-call
[2] https://www.nasdaq.com/articles/super-micro-computer-q4-earnings-miss-estimates-revenues-rise-y-y
[3] https://www.ainvest.com/news/super-micro-computer-q4-earnings-estimates-revenue-9-2-yoy-2508/