SMCI Stock Crashes on Q2 Miss Amid Competition—Heading Below $40?
Super Micro Computer’s Q2 earnings triggered a sharp selloff as margin pressure and revenue misses spooked investors, despite management...
Quick overview
- Super Micro Computer's Q2 earnings fell short of expectations, leading to a significant selloff and a drop in share price.
- Despite strong revenue growth for FY2025, the company faced margin pressure and lower profitability compared to the previous year.
- Management remains optimistic, projecting continued growth with Q1 FY2026 net sales guidance of up to $7 billion.
- The competitive landscape in the AI server market poses challenges, but Super Micro aims to capitalize on expansion opportunities.
Super Micro Computer’s Q2 earnings triggered a sharp selloff as margin pressure and revenue misses spooked investors, despite management signaling continued growth ahead.
Earnings Shock and Market Reaction
Super Micro Computer Inc. (NASDAQ: SMCI) faced a rough week as its Q2 2025 earnings fell short of Wall Street expectations. The disappointing revenue figures, attributed to intense competition in the AI server market, sparked a steep two‑day decline of over 6%, briefly pushing shares below $50.
During regular trading on Tuesday, buyers stepped in at the 20‑day simple moving average (SMA)—a crucial technical support level since May—lifting the stock back above $60. However, the relief was short-lived; after-hours trading saw the price plunge more than 15% to around $48 following the earnings release.
SMCI Chart Daily – We’ll See A Large Bearish Gap Tomorrow
Earnings and Competitive Pressures
The San Jose-based company missed fourth-quarter revenue projections, largely due to competition from larger server manufacturers producing high-performance machines for AI model training. While FY2025 closed with solid revenue growth and positive cash generation, Super Micro’s margins and EPS remained under pressure compared to the prior year.
Super Micro Computer Inc Q4 FY2025 Highlights
- Net Sales: $5.8B vs. $4.6B in Q3’25 and $5.4B in Q4’24, marking sequential and annual improvement.=
- Gross Margin: 9.5%, slightly below 9.6% in Q3’25 and 10.2% in Q4’24, reflecting mild margin pressure.
- Net Income: $195M vs. $109M in Q3’25 and $297M in Q4’24, showing recovery from prior quarter.
- Diluted EPS: $0.31 vs. $0.17 in Q3’25 and $0.46 in Q4’24.
- Non‑GAAP EPS: $0.41 vs. $0.31 in Q3’25 and $0.54 in Q4’24.
- Cash Flow from Operations: $864M, with capital expenditures and investments totaling $79M.
FY2025 Summary
- Net Sales: $22.0B vs. $15.0B in FY2024, highlighting significant top-line growth.
- Net Income: $1.0B ($1.68 EPS) vs. $1.2B ($1.92 EPS) in FY2024, reflecting lower profitability despite higher sales.
- Non‑GAAP Net Income: $1.3B ($2.06 EPS) vs. $1.3B ($2.12 EPS) in FY2024, including adjustments for stock-based compensation and convertible note losses.
- Non‑GAAP Gross Margin: 11.2% after $25M in stock-based compensation adjustments.
- Cash & Debt: $5.2B in cash and equivalents vs. $4.8B in total bank debt and convertible notes, maintaining a balanced liquidity position.
Business Outlook (FY2026)
Q1 FY2026 Guidance:
- Net Sales: $6.0B to $7.0B
- GAAP EPS: $0.30 to $0.42
- Non‑GAAP EPS: $0.40 to $0.52
- Assumptions: GAAP tax rate ~13%, non‑GAAP ~15.5%, share count 631M (GAAP) / 644M (non‑GAAP).
- Guidance includes $69M in stock-based compensation (net of $20M tax benefit) excluded from non-GAAP EPS.
Full-Year FY2026 Outlook: Net sales expected to reach at least $33B, signaling robust growth momentum.
Outlook and Guidance
Despite the earnings setback, management reaffirmed its growth trajectory, projecting Q1 FY2026 net sales of up to $7 billion and full-year sales of $33 billion. Executives emphasized that the company retains a stable financial footing and sees continued top-line expansion opportunities in the fast-growing AI infrastructure market.
Conclusion: Super Micro’s Q2 stumble highlights the intense competition and thin margins in the AI hardware space. While the stock’s technical support levels and forward guidance suggest potential recovery, investors remain cautious until the company demonstrates it can sustain revenue growth and defend market share against larger rivals.
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