Super Micro Computer (SMCI) stock plummeted about 17% in after-hours trading following the release of lower-than-expected results for its fourth quarter and full fiscal year ended June 30, 2025. Also, the company trimmed its Fiscal 2026 revenue outlook by $7 billion, which spooked investors and led to the share price drop.
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Revenues Up, Margins Under Pressure
Supermicro’s Q4 net sales rose 7.4% year-over-year to $5.8 billion but missed the consensus estimate of $5.98 billion. The upside reflects strong demand for its AI and cloud infrastructure offerings, particularly among Neoclouds and hyperscale customers.
However, profitability metrics showed some strain. Adjusted EPS declined 24.1% to $0.41 and came in below the analysts’ expectations of $0.45 per share. Also, gross margin dipped 70 basis points to 9.5%. This points to cost pressures and a shift in product mix toward lower-margin OEM servers or hardware.
Despite lower margins, the company reported a healthy $864 million in operating cash flow, which points to its strong business fundamentals. Also, SMCI spent $79 million on new projects and upgrades, signaling ongoing growth.
CEO Charles Liang attributed Supermicro’s positive momentum to its expanding global operations, growing client base, and new Datacenter Building Block Solutions (DCBBS) offering. He added, “We’re on track to grow our large-scale datacenter customer base from four in FY25 to six to eight in FY26.”
Fiscal 2026 Growth Targets
Looking ahead, Supermicro expects Q1 revenue between $6 billion and $7 billion, with adjusted EPS between $0.40 and $0.52. Analysts are expecting revenues of $6.13 billion with earnings of $0.59 per share.
For the full Fiscal 2026, the company projects net sales of at least $33 billion, a nearly 50% increase year-over-year. However, it compares unfavorably with the previous guidance of $40 billion.
Is SMCI Stock a Good Buy?
Turning to Wall Street, SMCI stock has a Hold consensus rating based on five Buys, seven Holds, and two Sells assigned in the last three months. At $42.85, the average Super Micro Computer stock price target implies 25.17% downside potential. Shares of the company have gained 87.9% year-to-date.
However, it’s worth noting that estimates will likely change following today’s earnings report.
