Super Micro Computer (NASDAQ:SMCI) Announces Quarterly Earnings Results, Beats Estimates By $0.58 EPS

Key Points

• Earnings and growth outlook exceeded expectations: Super Micro reported EPS of $1.81, beating the $1.23 consensus, while quarterly revenue surged 298% year over year to $19.9 billion. It raised fiscal 2027 revenue guidance to $72 billion–$82 billion.
• AI demand is driving rapid growth but may weigh on margins: AI solutions made up 71% of quarterly revenue, and management expects them to remain a large share of sales. The company forecast full-year gross margins of 11.8%–12.2%, reflecting lower-margin large-scale AI deployments.
• Execution and cash-flow risks remain: Component and data-center constraints could delay deployments, and one customer accounted for 44% of quarterly revenue. Super Micro also reported $481 million in negative free cash flow.

Super Micro Computer (NASDAQ:SMCI - Get Free Report) announced its quarterly earnings data on Tuesday. The company reported $1.81 earnings per share (EPS) for the quarter, topping the consensus estimate of $1.23 by $0.58, FiscalAI reports. Super Micro Computer had a return on equity of 27.83% and a net margin of 5.71%.

Here are the key takeaways from Super Micro Computer's conference call:

• Record growth and raised outlook: Q1 revenue reached $19.9 billion, up 298% year over year and above guidance, prompting the company to raise fiscal 2027 revenue guidance to $72 billion-$82 billion from $65 billion-$72 billion.
• Improved profitability and operating leverage: Non-GAAP gross margin expanded to 12.8%, up 330 basis points year over year, while revenue growth substantially outpaced operating-expense growth. Management attributed the improvement to customer mix, DCBBS solutions, and higher-margin software and services.
• AI-heavy mix is expected to pressure margins: AI solutions represented 71% of Q1 revenue and are expected to reach 70%-80% of fiscal 2027 revenue; because large-scale AI deployments carry lower margins than enterprise and channel business, full-year gross margin is guided to 11.8%-12.2%, implying a weaker second half.
• Working-capital efficiency improved materially: The cash conversion cycle fell from 149 days to 97 days, inventory days declined to 74, and customer deferred revenue rose by approximately $3.1 billion, helping fund much of the working-capital investment needed for growth.
• Execution remains exposed to constraints and concentration: Key component shortages, GPU availability, power, land, and data-center readiness could delay deployments, while one customer accounted for 44% of quarterly revenue. The company also reported negative free cash flow of $481 million and expects customer and product concentration to remain elevated during major AI build-outs.

Super Micro Computer Stock Up 3.1%

Shares of SMCI traded up $0.95 during mid-day trading on Tuesday, hitting $31.39. 60,372,318 shares of the company's stock were exchanged, compared to its average volume of 43,381,836. The stock has a market cap of $20.62 billion, a price-to-earnings ratio of 9.81, a P/E/G ratio of 0.56 and a beta of 2.02. The firm has a fifty day moving average of $38.10 and a two-hundred day moving average of $32.69. The company has a quick ratio of 2.07, a current ratio of 3.87 and a debt-to-equity ratio of 0.65. Super Micro Computer has a twelve month low of $19.48 and a twelve month high of $51.40.

Wall Street Analysts Forecast Growth

A number of analysts have recently issued reports on SMCI shares. Rosenblatt Securities reissued a "buy" rating and issued a $51.00 price target on shares of Super Micro Computer in a research report on Friday, October 16th. Needham & Company LLC reiterated a "buy" rating and issued a $46.00 price objective on shares of Super Micro Computer in a research note on Wednesday, August 12th. Citigroup reiterated a "neutral" rating and issued a $45.00 price objective (up from $39.00) on shares of Super Micro Computer in a research note on Thursday, October 8th. Mizuho increased their target price on shares of Super Micro Computer from $35.00 to $43.00 and gave the stock a "neutral" rating in a research report on Tuesday, October 6th. Finally, Stifel Nicolaus set a $42.00 target price on shares of Super Micro Computer in a research note on Wednesday, August 12th. Four investment analysts have rated the stock with a Buy rating, twelve have issued a Hold rating and two have given a Sell rating to the company. According to data from MarketBeat.com, the stock has an average rating of "Hold" and a consensus price target of $43.07.

Insiders Place Their Bets

In other news, Director Chiu-Chu Liang sold 100,000 shares of the company's stock in a transaction dated Wednesday, October 7th. The stock was sold at an average price of $45.02, for a total transaction of $4,502,000.00. Following the completion of the sale, the director owned 337,506 shares in the company, valued at approximately $15,194,520.12. This represents a 22.86% decrease in their position. The transaction was disclosed in a legal filing with the SEC, which can be accessed through this hyperlink. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, CEO Charles Liang sold 100,000 shares of the company's stock in a transaction dated Wednesday, October 7th. The stock was sold at an average price of $45.02, for a total value of $4,502,000.00. Following the sale, the chief executive officer owned 337,506 shares of the company's stock, valued at approximately $15,194,520.12. This trade represents a 22.86% decrease in their position. The SEC filing for this sale provides additional information. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Insiders sold 400,000 shares of company stock valued at $16,442,000 over the last quarter. 16.10% of the stock is currently owned by corporate insiders.

More Super Micro Computer News

Here are the key news stories impacting Super Micro Computer this week:

• Positive Sentiment: Fiscal Q1 revenue surged to $19.9 billion from $5.0 billion a year earlier, while adjusted EPS of $1.81 topped the $1.23 consensus. The results also exceeded the company’s preliminary figures. Supermicro Announces First Quarter of Fiscal Year 2027 Financial Results
• Positive Sentiment: Management’s next-quarter revenue outlook, with a $20.5 billion midpoint, topped analysts’ expectations; the company also issued a full-year outlook above Wall Street estimates. Strong AI-server demand is driving optimism about continued growth. Super Micro shares jump as revenue surges, and full-year outlook tops estimates
• Positive Sentiment: Supermicro introduced SN50 AI inference racks in partnership with SambaNova, expanding its offerings for enterprise AI workloads. Super Micro Computer unveils SN50 AI inference racks
• Neutral Sentiment: Options markets signaled expectations for a sizable post-earnings move, highlighting the potential for continued volatility as investors assess the results and outlook. Super Micro’s options wildcard
• Negative Sentiment: Gross margin fell to 12.7% from 17.5% in the prior quarter. A report also flagged cash outflow as inventory and receivables grew, leaving investors to watch whether rapid sales growth converts into cash and healthier margins. Supermicro’s Sales Quadruple as Cash Drains
• Negative Sentiment: Bernstein favored AMD over Super Micro, citing stronger perceived upside at AMD and caution about Super Micro’s execution. Bernstein Picks AMD Over Super Micro Ahead of Earnings

About Super Micro Computer

Super Micro Computer, Inc develops and sells high-performance server and storage systems for data centers, cloud computing, enterprise IT, telecommunications, and other demanding computing environments. The company offers application-optimized servers, workstations, blade and rack systems, storage solutions, networking products, and related infrastructure.

Supermicro also provides systems designed for artificial intelligence, machine learning, accelerated computing, and other workloads that use graphics processing units and specialized processors.

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