Super Micro (SMCI) Stock: Design Delays Push Shares Down Despite Raised Guidance

TLDR

• Super Micro Computer reported Q1 earnings of 35 cents per share, missing the 40 cents estimate, with revenue at $5.02 billion versus $6 billion expected
• Year-over-year revenue declined 15% while net income fell over 60% to $168.3 million from $424.3 million
• Approximately $1.5 billion in Q1 revenue shifted to Q2 due to customer-requested GPU rack design modifications
• Q2 revenue guidance of $10-11 billion exceeded analyst expectations of $7.83 billion
• Full-year revenue forecast increased to $36 billion minimum from prior $33 billion estimate

Super Micro Computer shares fell more than 9% in premarket trading Wednesday following disappointing first-quarter results. The AI server manufacturer posted earnings of 35 cents per share on $5.02 billion in revenue.

Wall Street expected 40 cents per share and $6 billion in revenue. The company had issued preliminary results last month to warn investors.

Year-over-year revenue dropped 15% from $5.94 billion. Net income plunged 60% to $168.3 million compared to $424.3 million in the prior year period.

CEO Charles Liang attributed the miss to GPU rack complexity. A major customer requested configuration changes that delayed shipments worth $1.5 billion.

GPU Integration Challenges Impact Delivery Timeline

The server maker’s partnership with Nvidia has made it a first-mover in AI infrastructure. Super Micro builds integrated systems around new GPU architectures, including Nvidia’s Blackwell Ultra series.

This partnership has generated a $13 billion GB300 order book. However, the complexity of next-generation GPU systems is creating execution challenges.

The company issued preliminary earnings two weeks before the official report. At that time, it warned revenue would hit $5 billion, down from original guidance of $6-7 billion.

Analysts Question Profit Margins on AI Deals

AI server companies are cutting margins to win large contracts. This strategy limits profit growth despite strong revenue expansion.

Susquehanna analysts noted similar issues. They said Super Micro’s lower-margin business approach and deep discounts on GB300 orders weren’t priced into the stock properly.

The competitive landscape has intensified. Some analysts suggest Dell has captured market share from Super Micro in recent quarters.

Forward Guidance Beats Expectations

Despite the quarterly miss, Super Micro raised its near-term outlook. Second-quarter revenue is projected at $10-11 billion, crushing the $7.83 billion consensus estimate.

Full-year revenue guidance now stands at minimum $36 billion, up from $33 billion previously.

The stock has climbed 56% year-to-date. Super Micro trades at a 16.94 price-to-earnings ratio, compared to 9.75 for Hewlett Packard Enterprise and 14.11 for Dell Technologies.

The $1.5 billion revenue shift from Q1 to Q2 explains much of the raised guidance. Customer design changes required additional integration work that pushed deliveries into the current quarter.

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