Super Micro Computer (NASDAQ: SMCI) shares sank sharply on Tuesday after the AI server specialist posted disappointing fiscal first-quarter results, extending a streak of earnings shortfalls and raising fresh concerns about profitability despite booming demand for artificial intelligence hardware.
The stock dropped as much as 9% following the report and was trading at around $43, trimming some of this year’s impressive surge but still leaving the SMCI stock up roughly 43% year-to-date.
The company delivered revenue of $5.02 billion, well below the $5.80 billion analysts expected. Adjusted earnings per share came in at $0.35, missing forecasts of $0.39. It marked the sixth straight quarter that Super Micro has fallen short of Wall Street estimates.
This latest miss did not come as a complete surprise. In late October, the technology firm warned that first-quarter revenue would land near $5 billion, far below its earlier projection of $6 billion to $7 billion, citing “design win upgrades” that delayed some orders into the December quarter.
Even so, investors reacted harshly as the final numbers confirmed a meaningful slowdown. Revenue dropped 15% from the $5.94 billion a year earlier, while net income was nearly cut in half to $168.3 million from $424.3 million.
The steep profit decline reflects intensifying margin pressures as the company launches new products and scales up its global manufacturing footprint.
SMCI’s AI rally
Super Micro has been one of the most notable beneficiaries of the AI boom, with its high-performance servers, often paired with Nvidia’s (NASDAQ: NVDA) powerful GPUs, fueling explosive growth through late 2023 and early 2024.
But momentum has cooled, and industry watchers say rivals like Dell (NYSE: DELL) have been picking up share just as Super Micro’s growth flattens.
Despite the weaker quarter, management struck an upbeat tone for the full year. Super Micro raised its sales outlook to $36 billion from $33 billion, highlighting a pipeline bolstered by new large-scale deals tied to Nvidia-powered AI systems.
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