Super Micro Computer (NASDAQ: SMCI) stock surged 17% in pre-market trading on Wednesday, July 22, after the company raised its gross margin outlook.
According to an official press release, Super Micro now expects fourth-quarter fiscal 2026 gross margins of 15% to 17%, well above its previous guidance of 8.2% to 8.4%, which eased investor concerns after a challenging month that tanked share prices by 28%.
At the same time, the firm disclosed that it booked more than $60 billion in new orders during the quarter, the highest quarterly total ever.
While fourth-quarter revenue is still expected near the lower end of the previously issued $11-12.5 billion guidance, investors focused on the sharp improvement in margins and the strength of future demand, not near-term sales.
SMCI stock is currently trading at $25.5, while the pre-market price sits at $29.85, a level not seen since late June.
Is Super Micro stock finally recovering?
Super Micro is scheduled to report its full fiscal fourth-quarter results on August 11. According to analyst estimates, the company is expected to post earnings per share of $0.70, up roughly 71% from a year earlier, while revenue is forecast to more than double to approximately $11.73 billion.
A growing backlog also provides greater visibility into future sales because it represents confirmed customer demand awaiting delivery. Of course, the record order figure is particularly notable given Super Micro’s size, as $60 billion in quarterly bookings exceeds one-and-a-half times the company’s projected fiscal 2026 revenue.
However, while retail sentiment turned bullish following the announcement, some bearish concerns surrounding the company still remain. For example, the company is under scrutiny following allegations earlier this year involving the illegal export of artificial intelligence (AI) servers containing certain Nvidia (NASDAQ: NVDA) chips to Chinese customers.
Wall Street also remains cautious despite the upbeat preliminary update. The consensus rating on Super Micro Computer stock is “Hold” as of press time, based on TipRanks data, although the average analyst price target of about $37 suggests potential upside of nearly 48% from Tuesday’s closing price.
The update also lifted sentiment across the AI server sector, with competitors such as Dell (NYSE: DELL) and HP (NYSE: HPQ) gaining between 5% and 6% in after-hours trading.
Featured image via Shutterstock
