AI Server Leader Misses Profit, Stock Drops 20%
Super Micro Computer, a prominent AI server manufacturer, released its fourth-quarter financial results for the period ending June 30th, on Tuesday, August 6th. While the company experienced substantial year-over-year and quarter-over-quarter revenue growth, the results did not meet market expectations, leading to a significant stock price drop of 20.14% on August 7th.
According to the financial report, Super Micro Computer's fourth-quarter revenue reached $5.308 billion, representing a 143% year-over-year increase and a 37.9% quarter-over-quarter rise, slightly below the market expectation of $5.327 billion. Under GAAP standards, net profit was $354 million, up 82.8% year-over-year but down 12.2% quarter-over-quarter, falling short of the market forecast of $491 million. Diluted earnings per share (EPS) were $5.51, an increase of 60.6% year-over-year but a decrease of 16% quarter-over-quarter, missing the guidance range of $7.20-$8.05 and the market expectation of $7.95. The gross margin dropped to a record low of 11.2%, down 5.8 percentage points year-over-year and 4.3 percentage points quarter-over-quarter.
Under Non-GAAP standards, net profit was $405 million, up 102% year-over-year but down 1.7% quarter-over-quarter, below the market expectation of $534 million. Diluted EPS was $6.25, up 78.1% year-over-year but down 6.0% quarter-over-quarter, missing the guidance range of $7.62-$8.42 and the market expectation of $8.14. The gross margin was 11.3%, a decrease of 5.8 percentage points year-over-year and 4.3 percentage points quarter-over-quarter.
In a post-earnings conference call, Super Micro Computer executives mentioned component shortages that impacted their ability to sell more products. CEO Charles Liang commented on potential delays in Nvidia’s latest Blackwell chip, noting that such delays are normal when new technology is introduced and assured that their liquid cooling solutions would remain unaffected.
The decline in the fourth-quarter gross margin to a historic low of 11.2% was attributed to business with a major cloud service provider and investments in the supply chain for new liquid cooling servers, impacting profitability.
Looking ahead, Super Micro Computer plans to restore its gross margin to the previous target range of 14% to 17% as it establishes new product supply chains and manufacturing capacities in Taiwan and Malaysia. The company remains optimistic about continued sales growth driven by increasing AI market demand, forecasting annual revenue of $26 billion to $30 billion by June 30, 2025, well above the analyst consensus of $23.6 billion.
Since late last year, Super Micro Computer's stock had surged by up to 116% by March due to increased server demand, particularly for AI servers. However, it has recently fallen about 48% from its peak in March, despite being included in the S&P 500 and NASDAQ 100 indexes.
