From Yahoo Finance: 2025-05-03 18:03:00

Supermicro’s stock plummeted after pre-announcing disappointing quarterly results. The company faces intense margin pressure and struggles to handle chip architecture transitions. Super Micro Computer’s shares have fallen by two-thirds over the past year due to volatility fueled by accounting controversies and investigations. The company designs and assembles servers and rack solutions with low gross margins, intense competition, and passing on expensive component costs.

Supermicro’s gross margin dropped from 17% to 11.3% in fiscal Q4 and remained strained at 11.9% in fiscal Q2. The company lowered its fiscal Q3 revenue forecast from $5-6 billion to $4.5-4.6 billion and adjusted EPS from $0.46-0.62 to $0.29-0.31. Customers delaying platform decisions contributed to the decline, with inventory reserves affecting gross margins.

Customers transitioning to Nvidia’s new Blackwell chip impacted Supermicro’s gross margins, dropping them to 9.7%. The company must manage its supply chain better during chip design transitions to match inventory and demand. With a low forward P/E ratio, Supermicro shares may not be expensive, but challenges with inventory and margins persist amidst competition and controversies.

Investors should consider the company’s struggles with gross margins and inventory management. Supermicro may benefit from the AI infrastructure buildout but must address current issues. With the recent market volatility, there are potentially better investments in AI stocks. The Motley Fool recommends looking beyond Super Micro Computer for potential returns.



Read more at Yahoo Finance: Super Micro Computer Stock Plunges. Is This a Buying Opportunity?