Super Micro Faces Stock Plunge Amid Revenue Shortfall Linked to Nvidia Shift
San Jose, CA – Super Micro Computer Inc. experienced a significant decline in its stock price following a warning regarding its third-quarter financial performance, attributed largely to a transition toward newer Nvidia Corporation chips. The company’s stock fell by nearly 15% in after-hours trading on Tuesday after it pre-announced a revenue and earnings shortfall for its fiscal March quarter.
Financial Outlook
Super Micro revised its revenue expectations downward, now forecasting between $4.5 billion and $4.6 billion for the March quarter. This marks a sharp decline from previous projections of $5.0 billion to $6.0 billion. The company also anticipates adjusted earnings per share (EPS) in the range of 29 cents to 31 cents, significantly lower than its earlier estimated EPS of 42 cents to 62 cents. Analysts had predicted a consensus revenue of $5.4 billion and adjusted EPS of 53 cents for the quarter, indicating that Super Micro’s new estimates are far below market expectations.
In addition to lower revenue forecasts, the company cited increased inventory reserves due to older-generation products that did not align with the latest market demands. “The GAAP and non-GAAP gross margin for Q3 was 220 basis points lower than Q2 primarily due to higher inventory reserves resulting from older-generation products,” Super Micro stated in an official announcement.
Impact of Nvidia’s New Product Family
Industry insights suggest that the revenue miss is linked to customers’ delayed decisions on platform upgrades as they pivot toward Nvidia’s latest chipset offerings. Nvidia’s new Blackwell product family, which promises enhanced performance for AI computing, has prompted many clients to defer purchases of existing technology and opt instead to wait for these next-generation products.
Analysts from Evercore ISI observed that Super Micro is heavily exposed to the previous generation of Nvidia GPUs, particularly the Hopper family, noting that customers seem to be favoring the new Blackwell architecture. “We believe this is reflective of SMCI being more Hopper-skewed while customers are opting to wait for Blackwell to ramp,” said Amit Daryanani, a lead analyst at Evercore ISI. Similar comments were echoed by Hewlett Packard Enterprise executives recently, indicating a broader trend affecting multiple vendors in the AI server landscape.
Market Performance and Future Reporting
Super Micro’s stock, which had seen a robust rise to approximately $97.67 earlier this year, has now dropped dramatically, trading down nearly 70% from that peak during after-hours trading. Despite this significant drop, the company’s shares remain up by about 18% year-to-date, revealing a more complex market sentiment.
The company plans to unveil its fiscal third-quarter results on May 6, following a series of financial disclosures that had previously restored its compliance with Nasdaq regulations.
Conclusion
As Super Micro navigates this turbulent market phase, it remains to be seen how its financial performance will shape its strategy in relation to rapidly evolving tech demands. The cautionary tale of navigating customer transitions towards next-generation technologies like Nvidia’s Blackwell will likely play a significant role in its upcoming earnings reports and strategic planning moving forward.
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(Reported by Emily Bary and Therese Poletti, MarketWatch)
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