From Nasdaq: 2025-05-04 23:21:00

Super Micro Computer stock (NASDAQ:SMCI) plummeted 11% after issuing disappointing preliminary results for the March quarter. Revenue is expected to be between $4.5 billion and $4.6 billion, well below prior guidance of $5 billion to $6 billion. Earnings per share are also projected to fall short at $0.29 to $0.31. Concerns arise about demand trends and potential market share loss.

The U.S. economy faces challenges as tariffs take effect, potentially leading to inflation. AI sector vulnerability to cost cuts during downturns could impact Super Micro. Export restrictions may pressure U.S.-based server makers, and companies may prioritize code efficiency over computing power expansion. Super Micro’s forecasted revenue growth may be difficult to achieve amid macroeconomic headwinds and recent earnings setback.

Despite challenges, Super Micro stock has positives. Its ties to Nvidia’s GPU ecosystem and expansion into the DLC server market could drive demand. SMCI’s valuation at 13x estimated 2025 earnings is lower than the S&P 500’s forward multiple of 20x, especially considering its 74.5% annual revenue growth over the past three years.

Investors should proceed with caution with Super Micro due to past controversies like accounting irregularities and delays in SEC filings. Recent financial statement filings eased some concerns, but the earnings miss and corporate governance issues warrant caution. Diversifying with a portfolio like the Trefis High Quality Portfolio, which outperformed the S&P 500, could mitigate risks associated with investing in a single stock like SMCI.



Read more at Nasdaq: Sell SMCI Stock After Earnings Miss?