Super Micro Computer Misses Q3 Earnings, Stock Drops

Super Micro Computer, Inc. (SMCI) released its third-quarter fiscal year 2025 earnings, which fell short of market expectations. The company reported earnings per share of 0.31 dollars, excluding certain items, and revenue of 4.6 billion dollars. This performance was disappointing, as some analysts had already lowered their expectations following the company's preliminary results released the previous week.

The company attributed the shortfall to customers delaying their purchasing plans. Super Micro Computer's CEO, Charles Liang, stated that while many commitments are expected to be fulfilled in the June and September quarters, economic uncertainty and tariffs could have short-term impacts. The company also noted that its gross margin for the third quarter was 220 basis points lower than the previous quarter, primarily due to increased inventory levels from older products and higher costs associated with accelerating the launch of new products.

For the fourth quarter, ending in June, super micro computer projected revenue to be between 5.6 billion dollars and 6.4 billion dollars, with earnings per share, excluding certain items, ranging from 0.40 dollars to 0.50 dollars. However, analysts had anticipated higher figures, with an average estimate of 6.59 billion dollars in revenue and 0.64 dollars in earnings per share.

The disappointing results and guidance have raised concerns among investors. The company's stock experienced a significant decline in after-hours trading, reflecting the market's disappointment with the performance and outlook. The company's previous optimism about the AI server market, driven by the demand for high-performance graphics cards, has been tempered by recent developments.

Super Micro Computer had previously issued an optimistic long-term revenue guidance in February, projecting sales of 40 billion dollars for the fiscal year ending in June 2026, nearly double the analyst estimates for the current fiscal year. However, the company faced challenges, including the delay in filing its 2024 fiscal year report and the resignation of its auditing firm, Ernst & Young, due to concerns over corporate governance and transparency. The company had been at risk of delisting from the Nasdaq until it submitted its financial reports in late February, bringing it back into compliance with the exchange's listing rules.

The company's performance highlights the challenges faced by the AI server market, which has seen a surge in demand for high-performance computing solutions. However, factors such as economic uncertainty, tariffs, and delays in product launches have created headwinds for companies like Super Micro Computer. The company's ability to navigate these challenges and meet its long-term goals will be closely watched by investors and industry analysts.