Super Micro Computer Stock Plunges 20% Following Q4 Earnings Miss and Weak Q1 Guidance

Super Micro Computer's shares dropped by 20% after missing Q4 FY25 EPS and revenue targets. The company's Q1 FY26 guidance also disappointed investors. Despite its low valuation, the company's margins must improve to regain investor confidence.

Super Micro Computer, Inc. (SMCI) experienced a significant setback in its fiscal fourth quarter (Q4) 2025 earnings report, leading to a 20% drop in its stock price. The company reported net sales of $5.76 billion, falling short of analysts' expectations by $156 million. The adjusted earnings per share (EPS) also missed the mark, coming in 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 a 47% annual growth in AI solutions across various sectors [1].

The earnings miss has led to a significant drop in SMCI's stock price, with 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].

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