Proactive Investors - Super Micro Computer Inc (NASDAQ:SMCI) shares plunged almost 17% on Wednesday after its fiscal third-quarter financials failed to meet high investor expectations for how the server maker would benefit from AI-related demand.
Super Micro posted revenue of $3.85 billion for fiscal 3Q, slightly missing the consensus analyst estimate of $3.86 billion.
Revenue almost doubled from the year-ago quarter’s $1.28 billion.
Earnings per share (EPS) of $6.65 was up from $5.59 in the year-ago quarter and topped estimates of $5.58.
The company raised its fiscal 2024 revenue outlook from its earlier guidance of $14.3 billion to $14.7 billion to $14.7 billion to $15.1 billion, above estimates of $14.6 billion.
For fiscal 4Q, it guided sales between $5.1 billion and $5.5 billion and adjusted EPS in the range of $7.62 to $8.42, above analyst estimates of $4.73 billion and $6.97 respectively.
CEO Charles Liang told investors that, as the company’s new solutions ramp, Super Micro expects to “continue gaining market share”.
But this wasn’t enough to impress investors, who were disappointed with the company’s forecast of $4 billion in AI chip sales for fiscal 2024.
Investors also remain concerned about the company’s ability to grow its market share as semiconductor chip giant Nvidia (NASDAQ:NVDA) expands into new business lines.
Analysts at Jefferies, on the other hand, reiterated their ‘buy’ rating on the stock, noting solid trends and strong guidance for the next quarter.
They pointed out that the Q3 revenue miss was driven by a lack of component availability until late in the quarter.
“Our bullish thesis remains intact given Super Micro is guiding well ahead of consensus for the June quarter,” they wrote.
They also highlighted that the company is on track to produce 2,000-plus direct-to-chip (DTC) liquid-cooled racks per month by the end of the June quarter, which they see as a competitive advantage, and upside from GB2000 solutions in fiscal 2025 with a higher average selling price per system.
They also see the company as able to capture demand from more chip vendors beyond Nvidia, such as Intel (NASDAQ:INTC) and AMD (NASDAQ:AMD).
“We reiterate our 'buy' as Super Micro remains a pure play AI server vendor and we expect continued positive estimate revisions in the long term,” said Jefferies.
However, they lowered their price target on the stock from $1,280 to $1,090 on lower estimates, with their 2026 EPS forecast lower on a higher share count due to the company’s March public offering, in addition to increased competitive risk.
Shares of Super Micro traded down 16.8% at about $715 at noon on Wednesday.