The stock of Super Micro Computer (SMCI) is down 4% after the server maker reported a 66% plunge in its net income and offered disappointing forward guidance.
The Silicon Valley-based company reported Fiscal third-quarter earnings per share (EPS) of $0.31, which was well below the $0.50 forecast on Wall Street. Revenue of $4.60 billion also missed analysts’ consensus estimate of $5.42 billion.
On April 29, Super Micro Computer issued a preliminary earnings announcement and said that it expected third-quarter sales of $4.50 billion to $4.60 billion, with adjusted earnings of $0.29 to $0.31. The company’s net income declined 66% from a year ago.
Super Micro Computer’s net income. Source: Main Street Data
Disappointing Outlook
Management at Super Micro Computer said their gross margin decreased to 9.6% from 11.8% in the previous quarter. The company also updated its guidance for Fiscal 2025, saying it now expects revenue of $21.80 billion to $22.60 billion, down from a previous forecast that called for sales of$23.50 billion to $25 billion.
For the current quarter, Super Micro Computer estimates sales of $5.60 billion to $6.40 billion and EPS of $0.40 to $0.50. The Fiscal fourth-quarter guidance fell short of Wall Street estimates of $0.66 in earnings and revenue of $6.65 billion.
Heading into this print, Super Micro Computer had faced numerous challenges, including delaying its previous financial results and replacing its auditor last year amid an accounting scandal. Initially a winner of the artificial intelligence (AI) trade, SMCI stock has declined 60% over the past 12 months as analysts and investors abandoned the company due to its scandals.
Is SMCI Stock a Buy?
Super Micro Computer stock has a consensus Hold rating among 11 Wall Street analysts. That rating is based on four Buy, five Hold, and two Sell recommendations issued in the last three months. The average SMCI price target of $43 implies 30.54% upside from current levels. These ratings are likely to change after the company’s latest financial results.
