Super Micro Computer (SMCI) Plummets 18% Amidst Disappointing Earnings

Super Micro Computer (SMCI) shares dropped 18.29% after Q4 FY25 earnings showed a 34% decline in net income to $195mln and a 7.66% increase in net sales to $5.76bln. The company's CEO and CFO attributed the decline to the impact of President Trump's import tariffs, with the CFO stating that they are closely monitoring the situation. The company has already taken measures to reduce the impact of tariffs.

Super Micro Computer (SMCI) shares fell 18.29% on Wednesday following the release of its fourth-quarter fiscal 2025 (Q4 FY25) earnings report. The company reported non-GAAP earnings of 41 cents per share, which missed the Zacks Consensus Estimate by 6.8%. This marked a 34.9% decline in net income year over year, totaling $195 million [1].

The company's revenues for the quarter reached $5.76 billion, a 7.66% increase from the prior year, but this figure missed the Zacks Consensus Estimate by 3.82%. Revenues from Server and Storage systems, which account for 97.6% of total revenues, increased by 10% to $5.62 billion. However, revenues from Subsystems and Accessories decreased by 48% to $139 million [1].

By geography, revenues from the United States accounted for 38% of total sales, reflecting a 33% decrease year over year. Asia contributed 42% of the quarter's revenues, up 91% year over year. Revenues from Europe and the Rest of the World increased by 66% and 53%, respectively [1].

The company's CEO and CFO attributed the decline in net income to the impact of President Trump's import tariffs. The CFO stated that the company is closely monitoring the situation and has taken measures to mitigate the impact of tariffs [2].

SMCI's non-GAAP gross margin declined to 9.6%, down 70 basis points year over year, primarily due to unfavorable product and customer mix, including heavier hyperscale and GPU rack shipments with lower margins. Non-GAAP operating expenses increased by 29% year over year, reaching $239 million [1].

As of June 30, 2025, SMCI's total cash and cash equivalents stood at $5.17 billion, up from $2.54 billion in the previous quarter. Operating and free cash flow for the reported quarter were $864 million and $841 million, respectively [1].

For the first quarter of fiscal 2026, SMCI expects net sales of $6 billion to $7 billion and non-GAAP earnings in the range of 40-52 cents per share. The company projects revenues to be $33 billion for fiscal 2026 [1].

SMCI currently has a Zacks Rank #5 (Strong Sell). Investors may consider better-ranked stocks such as Alkami Technology (ALKT), Arista Networks (ANET), and Amphenol (APH) in the broader Zacks Computer & Technology sector [1].

References:
[1] https://www.tradingview.com/news/zacks:40461ca3a094b:0-super-micro-computer-q4-earnings-miss-estimates-revenues-rise-y-y/
[2] https://www.nasdaq.com/articles/super-micro-computer-q4-earnings-miss-estimates-revenues-rise-y-y