Super Micro Computer (NASDAQ:SMCI) faced yet another disastrous session on Wednesday, adding to a series of valuation-busting days. Shares plummeted after the AI server specialist’s preliminary fiscal first-quarter results fell short of expectations, leaving the stock down by more than half its value in just over a week.
For the September quarter, the company said revenue will hit the range between $5.9 billion and $6 billion, below its prior expectations of $6 to $7 billion, and some distance behind the Street’s forecast of $6.44 billion. On the bottom line, adj. EPS is expected to be in the $0.75 to $0.76 range, above the 0.74 consensus estimate.
Moving forward, the company anticipates December quarter revenue of $5.8 billion at the midpoint, missing analyst expectations of $6.84 billion. Likewise for adj. EPS, which is expected to land at $0.61 at the midpoint, below the Street’s estimate of $0.81.
SMCI put the soft revenue guide down to a limited supply of Nvidia’s upcoming Blackwell GPUs. Assessing the situation, Rosenblatt’s Hans Mosesmann, an analyst ranked 3rd amongst the thousands of Wall Street stock pros, wonders if the issue is an additional delay with Nvidia’s Blackwell GPUs or a yield problem – meaning production ramps up on schedule but results in fewer GPUs being available.
“Significant rack level liquid cooled capacity at scale is just waiting for Blackwell seemed to be the theme of the evening, which seemed to us indicative of no shifts in Nvidia GPU share to other OEM/ODMs,” the 5-star analyst went on to say. “To the contrary, management indicated increasing engagements with new CSPs and enterprise players.”
The story with SMCI right now, however, is less about the numbers and more about other ongoing issues. Following Ernst & Young’s resignation as its auditor, the company is actively searching for a replacement. A recent investigation by its Special Committee uncovered no evidence of fraud or misconduct. Despite these developments, SMCI assures that customer service remains unaffected. The company is also working to complete its FY24 10-K, though a filing date has not yet been confirmed. It received a non-compliance notice from Nasdaq on September 17 due to the delay, risking delisting, but SMCI has pledged to take all necessary steps to regain compliance promptly.
Given the uncertainty, Mosemann suspended his coverage of SMCI and has no rating or price target at the moment. (To watch Mosemann’s track record, click here)
Other analysts, however, do have targets, with an average price of $54.17, suggesting an upside potential of ~139% over the next year – although some haven’t adjusted their models in a while. The Street is more muted on the rating front; based on 9 Holds, 3 Buys and 1 Sell, the stock claims a Hold consensus rating. (See SMCI stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
