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

Super Micro Computer (NASDAQ:SMCI) posted its earnings results on Tuesday. The company reported $1.81 earnings per share (EPS) for the quarter, beating analysts’ consensus estimates of $1.23 by $0.58, FiscalAI reports. Super Micro Computer had a net margin of 5.71% and a return on equity of 27.83%.

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 Price Performance

Shares of Super Micro Computer stock traded up $0.95 during trading on Tuesday, hitting $31.39. 60,372,318 shares of the company’s stock traded hands, compared to its average volume of 43,381,836. Super Micro Computer has a twelve month low of $19.48 and a twelve month high of $51.40. The company has a market cap of $20.62 billion, a PE ratio of 9.81, a PEG ratio of 0.56 and a beta of 2.02. The firm’s fifty day moving average price is $38.10 and its 200 day moving average price is $32.69. The company has a debt-to-equity ratio of 0.65, a current ratio of 3.87 and a quick ratio of 2.07.

Insiders Place Their Bets

In other news, CEO Charles Liang sold 100,000 shares of the stock in a transaction that occurred on Wednesday, October 7th. The shares were sold at an average price of $45.02, for a total transaction of $4,502,000.00. Following the sale, the chief executive officer directly owned 337,506 shares of the company’s stock, valued at $15,194,520.12. This represents a 22.86% decrease in their ownership of the stock. The transaction was disclosed in a document filed with the Securities & Exchange Commission, which is available through this link. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, Director Chiu-Chu Liang sold 100,000 shares of Super Micro Computer stock in a transaction that occurred on 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 transaction, the director directly owned 337,506 shares in the company, valued at $15,194,520.12. The trade was a 22.86% decrease in their position. The disclosure for this sale is available in the SEC filing. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Insiders have sold a total of 400,000 shares of company stock valued at $16,442,000 over the last ninety days. Insiders own 16.10% of the company’s stock.

Key Stories Impacting Super Micro Computer

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

Analyst Upgrades and Downgrades

SMCI has been the topic of several research analyst reports. Sanford C. Bernstein set a $42.00 price target on Super Micro Computer in a research report on Thursday, August 13th. Wall Street Zen raised Super Micro Computer from a “hold” rating to a “buy” rating in a research report on Saturday. Zacks Research cut Super Micro Computer from a “strong-buy” rating to a “hold” rating in a research report on Monday, October 12th. Northland Securities set a $36.00 target price on Super Micro Computer in a research note on Wednesday, July 22nd. Finally, The Goldman Sachs Group reaffirmed a “sell” rating and issued a $34.00 target price (up from $30.00) on shares of Super Micro Computer in a report on Wednesday, August 12th. Four analysts have rated the stock with a Buy rating, twelve have assigned a Hold rating and two have issued a Sell rating to the company’s stock. According to MarketBeat.com, the stock currently has a consensus rating of “Hold” and an average target price of $43.07.

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.