Super Micro Computer (NASDAQ:SMCI) shares had a rollercoaster ride on Wednesday, soaring as much as 13% during the session before paring gains to close up around 3%. The sharp moves came in response to the company’s preliminary F2Q25 (December quarter) results, which fell short of expectations.
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The AI server maker missed expectations on both the top and bottom line. For the quarter, the company expects adj. EPS to land between $0.58 and $0.60, with revenue hitting the $5.6 billion to $5.7 billion range – both falling short of respective Street expectations of $0.61 and $5.89 billion.
The company didn’t fare any better with its near-term outlook, either. Super Micro’s sales guide for the current quarter was set between $5 billion and $6 billion, compared to the analysts’ forecast of $5.92 billion. The softness is driven by supply chain issues related to next-gen GPUs, a shift in customer backlog to Blackwell-based products, and reduced margins on current and older products.
So, that doesn’t sound all that promising. However, the positive reaction was down to what the company thinks will follow later in the year.
CEO Charles Liang stated that the company expects fiscal year 2025 revenue to fall between $23.5 billion and $25 billion, thereby setting the stage for revenues of $40 billion in fiscal year 2026. The updated revenue projection for fiscal 2025 is lower than the previous forecast of $26 billion to $30 billion. However, the anticipated $40 billion for fiscal 2026 is some distance above the current Street estimate of $29.2 billion.
In a separate update, in what also represented good news for investors, Super Micro announced that it now expects to complete its FY24 audit by the February 25th filing extension deadline granted by NASDAQ. That should prevent the stock’s dreaded delisting.
As was the case for many on Wall Street, J.P. Morgan’s Samik Chatterjee, an analyst ranked in the top 3% of Wall Street stock pros, was somewhat taken aback by the updated guide, which implied a “strong revenue inflection in F4Q25 (Jun-end).” That, says the analyst, presents a “nice upside surprise in what appeared to be an otherwise challenging near-term backdrop for supply/demand.”
However, Chatterjee isn’t ready to fully embrace such an optimistic outlook just yet, citing: “1) limited visibility around the easing of supply chain constraints for next-generation GPUs; and 2) upcoming AI Server product cycle represents a much higher competitive backdrop compared to previous generation of Hopper-based products with many of its peers now boasting stronger portfolios and looking to more meaningfully participate in the industry.”
Nevertheless, primarily due to the “increased conviction” from management in meeting the regulatory deadlines, Chatterjee has raised his price target on SMCI from $23 to $35. Yet, even with the revision, his target sits 14% below the current share price. As such, the analyst assigns an Underweight (i.e., Sell) rating on the stock. (To watch Chatterjee’s track record, click here)
Turning now to the broader Wall Street view, where with an additional 3 Holds and 3 Buys, the analyst consensus rates the stock a Moderate Buy. However, going by the $38.40 average price target, a year from now, shares will be changing hands for a 3% discount. (See SMCI stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
