Supermicro (SMCI) shares surged more than 8% after the AI server maker topped earnings expectations for its fiscal fourth quarter and issued a first-quarter revenue forecast far above what analysts had projected, according to Yahoo Finance.
The company reported adjusted earnings per share of $1.70 on revenue of $11.2 billion for the quarter, edging past Wall Street's expectations of $1.59 in EPS and $11.1 billion in net sales, based on Bloomberg analyst consensus estimates cited by Yahoo Finance. That marks a sharp jump from the same period last year, when Supermicro posted EPS of $0.41 on revenue of $5.7 billion.
Gross margins for the quarter came in at 17.5%, nearly double the 9.5% margin Supermicro reported a year earlier. Looking ahead, the company projected net sales for its first quarter of between $14.5 billion and $15.5 billion, well above the $11.9 billion analysts had anticipated, Yahoo Finance reported.
The results largely confirmed figures Supermicro had already previewed. As The Motley Fool noted, the company gave a preliminary update on July 21, roughly three weeks before its full report, telling investors that fiscal fourth-quarter revenue would land near the low end of its previously issued guidance range of $11.0 billion to $12.5 billion. At that time, Supermicro also said gross margin would fall between 15% and 17%, and disclosed it had received more than $60 billion in new orders during the quarter, pushing its order backlog to record levels.
Because so much of the quarter's headline numbers were already public, The Motley Fool argued that the one figure investors were truly waiting on was Supermicro's outlook for fiscal 2027, which management was expected to unveil alongside Tuesday's full results. That guidance, the outlet wrote, would be the first indication of how the company's massive order backlog might translate into future revenue.
A Margin Swing That Breaks From Pattern
The jump in gross margin stood out as one of the more surprising elements of the report. Supermicro's margins had been volatile over the past year, moving from 9.5% in the year-ago quarter to 6.3% in fiscal Q2, then 9.9% in fiscal Q3, before management had guided for just 8.2% to 8.4% ahead of the fourth quarter, according to The Motley Fool. The eventual 17.5% figure roughly doubled that guidance.
Supermicro has attributed the improvement primarily to a favorable shift in customer and product mix, but The Motley Fool cautioned that this explanation offers little assurance the same mix will persist into future quarters, calling the margin figure the least proven of the numbers Supermicro had disclosed.
The more than $60 billion in new orders booked during the quarter also came with caveats. Supermicro itself disclosed that some portion of that backlog may not represent firm commitments and remains subject to cancellation or delay, The Motley Fool reported. A backlog reflects contracted demand rather than revenue already collected, and converting it into actual sales requires significant working capital, since servers must be built and shipped before customers pay.
That cash dynamic has already strained Supermicro's balance sheet. The company used $6.6 billion of cash in operations during its fiscal third quarter and finished that period holding $1.3 billion in cash against $8.8 billion in bank debt and convertible notes, according to The Motley Fool. To help fund its continued build-out, Supermicro announced in June that it was raising as much as $7 billion through equity-linked financing, Yahoo Finance reported.
Regulatory Cloud Still Hanging Over the Company
Supermicro's growth story has unfolded alongside an ongoing legal and regulatory overhang. In April, the company launched an independent investigation after the U.S. Department of Justice indicted co-founder Yih-Shyan Liaw and two others on allegations of violating U.S. export controls, according to Yahoo Finance. Supermicro itself was not named as a defendant in that case.
The Motley Fool noted that Supermicro's board is conducting an independent review of certain transactions connected to the alleged export-control issues, and that the company has warned the outcome of that review could affect its financial forecasts, including the preliminary results it disclosed in July.
Despite the legal uncertainty and the strong quarterly beat, Supermicro's stock has significantly lagged behind other companies riding the AI infrastructure boom. Shares are down roughly 30% over the past 12 months, even as rival Hewlett Packard Enterprise (HPE) has climbed about 160% and Dell Technologies (DELL) has soared more than 230% over the same stretch, according to Yahoo Finance.
The Motley Fool framed that gap as a sign the market remains skeptical that Supermicro's blockbuster order numbers and margin improvement are sustainable. Ahead of Tuesday's report, shares traded in the low $30s, down about 45% from their 52-week high, and valued at roughly 9 times expected earnings for the year ahead, according to the outlet. By comparison, Supermicro's trailing price-to-earnings ratio sits near 17, a gap the outlet attributed to analysts expecting sharp earnings growth that the market has so far been reluctant to fully price in.
On the growth side, Supermicro's ambitions extend beyond its current order book. In June, CEO Charles Liang wrote on social media platform X that the company plans to co-build a gigawatt-scale data center for SpaceX and xAI within a year, according to Yahoo Finance, underscoring how central massive AI infrastructure contracts have become to Supermicro's long-term strategy even as investors weigh the durability of its recent numbers.
