The Super Micro Computer NASDAQ: SMCI has recently become famous for its recent pop in revenue. The Artificial Intelligence (AI) server company rose more than 24% after the report.
The Super Micro Computer Today
The Super Micro Computer
- 52 week interval
- $19.48
▼
$62.36
- The P/E ratio
- 18.32
- Target Value
- $37.43
This marks the stock's second straight post-earnings move, as shares rose 14% following its February release.
Despite this big move, Super Micro shares are up only 16% in 2026. This comes as the US government filed charges against Super Micro founder Yih-Shyan “Wally” Liaw, causing SMCI to drop 33% in one day in mid-March.
Overall, Super Micro showed positive signs in its latest quarter, but its outlook remains highly uncertain. Here's what investors should know.
Super Micro Falters in Sales, Storms Past EPS Estimates
In its Q3 2026 fiscal year, Super Micro posted $10.24 billion in revenue, a whopping 123% year-over-year (YOY) increase. (Note that Super Micro's financial reporting period is approximately two quarters before the calendar year reporting period.)
Although this growth rate is very high, it was much lower than the market and the company expected. Super Micro itself had predicted that revenue would be “at least $12.3 billion.” Therefore, the company missed its target by more than two billion dollars. It also fell well short of Wall Street expectations, with analysts forecasting sales of $12.39 billion.
On the other hand, the company took a big hit in adjusted earnings per share (EPS). Adjusted EPS rose 171% YOY to 84 cents. This crushed estimates of 63 cents and the company's guidance of “at least 60 cents.”
This dichotomy comes as Super Micro's gross margin improved significantly in just one quarter. In Q2 of fiscal 2026 (FY2026), the company's revenue was $12.68 billion, but adjusted margin fell to 6.4%. This resulted in an adjusted profit of $812 million. In Q3 FY2026, in contrast, adjusted gross margin increased by 370 basis points to 10.1%.
While revenue was down at $10.24 billion, adjusted profit rose sharply to $1.03 billion. This was one of the key factors that allowed Super Micro to miss revenue expectations by a wide margin, yet exceed adjusted EPS estimates by a wide margin.
Gross Margin Improves, But at the Cost of Revenue
Super Micro's extremely low gross margin was a top concern from its previous earnings report. Therefore, it makes sense that the market responded positively to the improved margins in its recent results. However, looking at the bottom, it's hard to say that the Super Micro has shown much improvement. The increase in its gross margin came as sales missed more than $2 billion, and some customers delayed shipments. If the company had delivered these sales, it is entirely possible that the gross margin would have been much lower than 10.1%.
The Super Micro guide provides proof of this. The company expects to recoup some of the revenue it missed in Q3 next quarter. Using average figures, it sees sales rise to $11.8 billion, but gross falls 8.3%. This shows that the company's sales and gross margins are moving in different directions.
While this isn't a bad thing in all cases, the Super Micro already has very thin margins making it a concern. Firms in a strong position are often able to increase revenue and margins at the same time. This does not prove to be the case for the Super Micro.
However, the company continues to be confident in its Data Center Building Blocks Solutions (DCBBS). DCBBS comes with high gross margins, often over 20%. The company's goal is to increase DCBBS to more than 20% of net income over the next two years, which helps improve its overall margin profile. However, Super Micro did not disclose DCBBS's revenue contribution, making progress towards its goal difficult to assess.
Super Micro: Reputation Risk Rises, Price Heads Down
The Justice Department charged Liaw with allegedly conspiring to sell US-made servers to the US, in violation of export laws. Authorities arrested Liaw, who resigned from Super Micro. Although Super Micro says it is not the target of the investigation, its founder becoming a victim could cause significant reputational damage.
Notably, many analysts have asked the company whether it will need to refinance past investments as a result. Super Micro said, “we don't believe we'll need to do it again,” but he didn't flat out say no.
This is not the first time accounting or legal issues have surrounded Super Micro. In 2024, Big Four accounting firm EY resigned as Super Micro's auditor. EY noted that it “did not want to be included in the financial statements” prepared by Super Micro's management.
Super Micro Computer Stock Forecast today
$37.43
Best exchange rate of 8.09%.Hold on
Based on 17 Analyst Ratings
| Current Price | $34.63 |
|---|---|
| High Forecast | $64.00 |
| Average prediction | $37.43 |
| Low Prognosis | $22.00 |
Super Micro Computer Stock Forecast Details
Super Micro's sales and gross margin trading, along with the lawsuit, highlight significant uncertainty about the stock.
The reaction of Wall Street analysts following the report reflects this. Despite the growth in shares, JPMorgan Chase & Co. and Wedbush both significantly lowered their price targets for SMCI. However, Needham & Company reiterated its buy rating, and issued a firm price target of $40.
The MarketBeat consensus price on Super Micro sits near $36, which means about 5% upside for the shares. The target price was revised after the company's report to be slightly lower, near $35.30. All in all, concerns about the company's profitability have not gone away, and Super Micro now has a new reputational problem hanging over its head.
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