From Nasdaq: 2025-02-17 04:14:00

Super Micro Computer (NASDAQ: SMCI) shares have been volatile, surging before its preliminary earnings report, then dropping nearly 10%. The stock is up 40% year to date but down 50% over the past year. The company lowered fiscal 2025 guidance but has big expectations for fiscal 2026, forecasting $40 billion in revenue.

Supermicro faced challenges in 2024, including a short report, financial filing delays, and a DOJ investigation. The company expects revenue for fiscal Q2 to be between $5.6 billion to $5.7 billion, with adjusted EPS ranging from $0.58 to $0.60. Gross margins have been under pressure, with Q4 margins at 11.2%.

For fiscal Q2 2025, Supermicro projects gross margins between 11.8% to 11.9%, with fiscal Q3 margins around 12%. The company forecasts fiscal Q3 revenue between $5 billion to $6 billion, adjusted EPS of $0.46 to $0.62. It reduced its fiscal 2025 revenue forecast to $23.5 billion to $25 billion.

Supermicro announced a $700 million private placement of convertible senior notes due in 2028 to support business growth. The company expects to reach $40 billion in revenue in fiscal year 2026, citing Nvidia’s GPU platforms and liquid-cooled data center solutions as growth drivers.

Investors are advised to proceed with caution on Super Micro Computer stock due to competitive pressures, reduced guidance, and weak gross margins. While the stock is trading at low P/E ratios, uncertainties remain around accounting issues and investigations. Consider safer investment options like Nvidia or Broadcom for exposure to AI infrastructure growth.

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Read more at Nasdaq: Super Micro Computer’s Roller-Coaster Ride Continues. What Should Investors Do With the Stock?