TLDR
- Super Micro Computer missed Q1 estimates with earnings of 35 cents per share versus 40 cents expected and revenue of $5.02 billion versus $6 billion expected
- Revenue dropped 15% year-over-year from $5.94 billion, while net income fell more than half to $168.3 million from $424.3 million
- Design changes requested by a high-volume customer pushed approximately $1.5 billion in expected Q1 revenue into Q2
- The company raised Q2 revenue guidance to $10-11 billion, beating the $7.83 billion analyst estimate
- Full-year revenue forecast increased to at least $36 billion from the previous $33 billion outlook
Super Micro Computer shares dropped more than 9% in premarket trading Wednesday after the company reported disappointing first-quarter results. The AI server maker posted earnings of 35 cents per share on revenue of $5.02 billion.
Super Micro Computer, Inc., SMCI
Analysts had expected 40 cents per share and $6 billion in revenue. The miss came despite the company issuing preliminary results last month to prepare investors.
Revenue fell 15% year-over-year from $5.94 billion. Net income dropped more than half to $168.3 million, or 26 cents per share, compared to $424.3 million a year earlier.
$SMCI (Super Micro Computer) #earnings are out: pic.twitter.com/G5q5tjoviw
— The Earnings Correspondent (@earnings_guy) November 4, 2025
The company blamed design changes for the shortfall. A high-volume customer requested configuration changes to GPU racks, pushing about $1.5 billion in expected first-quarter revenue into the second quarter.
CEO Charles Liang pointed to complexity as the main issue. “The delays were largely caused by the complexity of these new graphics processing unit racks, which require intricate integration, testing, and validation,” he said.
The timing comes at a critical moment for Super Micro. The company has positioned itself as a key player in the AI infrastructure boom through its partnership with Nvidia.
That partnership allows Super Micro to be first to market with systems built around new GPU architectures. This includes Nvidia’s Blackwell Ultra series, which has contributed to Super Micro’s $13 billion GB300 order book.
Margin Concerns Cloud Growth Story
J.P. Morgan analysts highlighted a growing problem in the AI server market. “The profit opportunities have been dramatically different than the revenue opportunities in AI compute,” they wrote.
Server makers are sacrificing margins to win large deals. This leaves limited profit upside for investors, according to the analysts.
Susquehanna analysts echoed these concerns. They noted that Super Micro’s pursuit of lower-margin business and deep price discounts to secure GB300 orders weren’t reflected in the current valuation.
The company’s financial metrics show the strain. While revenue has grown, margins have come under pressure as competition intensifies.
Revenue Guidance Beats Expectations
Despite the Q1 miss, Super Micro raised its outlook for the coming periods. The company now expects second-quarter revenue of $10 billion to $11 billion, well above the $7.83 billion analyst estimate.
Full-year revenue guidance also increased to at least $36 billion. That’s up from the previous forecast of $33 billion.
The stock has gained nearly 56% year-to-date. Super Micro currently trades at a price-to-earnings ratio of 16.94, compared to 9.75 for Hewlett Packard Enterprise and 14.11 for Dell Technologies.
The company issued preliminary earnings about two weeks before this report. At that time, it warned revenue would come in at $5 billion for the quarter, down from prior guidance of $6 billion to $7 billion.
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