Super Micro Computer Cuts Outlook after Strong Competition from Nvidia
Super Micro Computer expects muted profits in 2026 due to high margin pressures and stiff competition.
Quick overview
- Super Micro Computer (SMCI) has reduced its outlook for the next quarter due to excessive inventory and declining sales.
- The company faces stiff competition from Nvidia, which is dominating the GPU and AI chip market.
- Despite a positive stock price increase, SMCI is struggling with profit margins and slower-than-expected inventory turnover.
- For fiscal year 2025, SMCI anticipates earnings of $22 billion, but expects challenges in 2026 as they shift focus to data center solutions.
After its Q4 results came in, Super Micro Computer (SMCI) slashed its outlook for the next quarter, claiming it will be impacted by excessive stock and diminished sales.
Super Micro Computer is facing powerful sales competition thanks to Nvidia (NVDA) and their GB300 platforms that are designed for next generation computers. Even so, their stock price remains slightly positive with a 0.60% increase on Thursday from the previous day.
Nvidia is certainly the leader in GPUs and computer chips for systems that generate AI programs. However, the market is big enough for plenty of competition, and Super Micro Computer is one of their strongest competitors. But Nvidia is expected to control so much of the market in the coming months that even Super Micro has to pull back on their expectations for sales.
They are also sitting on plenty of old inventory that is moving slower than expected, and the company is dealing with margin pressures as well. They are struggling to make a profit as they attempt to offer competitive pricing for the saturated market.
Super Micro Computer’s Expectation for the Next Quarter
Even though the AI market is extremely healthy right now, Super Micro Computer is having trouble making the sales they anticipated. For the fiscal year 2025, their earnings are at $22 billion, an increase of 47% from year to year. That would be incredibly promising if it were not for their outlook for 2026.
For all of next year, the company expects to earn about $33 billion and somewhere between $6 and $7 billion for the first fiscal quarter. The company is planning to shift their focus to data center block building solutions in 2026, as they expect that service to be their most lucrative.
Despite performing well when it comes to revenue and with fairly strong revenue expectations for next year, SMCI is having trouble making the kind of profits that make their shareholders happy. For the year so far, SMCI stock is above its starting point, at $44.60 compared to $33.33 per share from January. However, it is far below its 2025 peak of $60.25 from back in February.
- Check out our free forex signals
- Follow the top economic events on FX Leaders economic calendar
- Trade better, discover more Forex Trading Strategies
- Open a FREE Trading Account
Save