Super Micro Stock Falls 10% on Q1 Earnings Miss, Raises Q2 Outlook Amid AI Slowdown Signals

• Revenue Miss: Super Micro generated $5.02 billion in Q1, far below the $6 billion analyst consensus, signaling slowdowns in server demand.

• EPS Shortfall: Adjusted earnings per share hit 35 cents, underperforming the anticipated 40 cents per share.

• Yearly Drop: Revenue decreased 15% from $5.94 billion in the prior year’s quarter, with net income falling to $168.3 million from $424.3 million.

Super Micro earnings miss triggers 10% stock plunge amid AI slowdown concerns. Discover key financial details, future guidance, and market impacts for investors navigating tech volatility. Stay informed on server sector shifts.

What Caused Super Micro’s Stock to Plunge After Q1 Earnings?

Super Micro earnings miss led to a sharp 10% drop in the company’s stock during after-hours trading on Tuesday, as the server manufacturer disclosed disappointing first-quarter fiscal 2025 results. Revenue came in at $5.02 billion, significantly below the $6 billion projected by analysts, while adjusted earnings per share reached only 35 cents against the expected 40 cents. This marked a 15% year-over-year revenue decline from $5.94 billion, highlighting delays in server shipments tied to design upgrades and broader pressures in the AI infrastructure market.

How Is Super Micro Addressing AI Slowdown Concerns for Q2?

Despite the Q1 setback, Super Micro Computer expressed optimism for the second quarter, raising its revenue guidance to $10 billion to $11 billion, surpassing the $7.83 billion consensus from LSEG analysts. Management attributed the prior quarter’s misses to postponed server builds due to “design win upgrades,” which are now slated to ship in Q2, potentially boosting performance. In the earnings call, executives emphasized the company’s strong position in the AI server sector, though analysts note increasing competition from players like Dell gaining market share. Super Micro’s servers, often equipped with Nvidia GPUs, have driven growth, but recent figures indicate a cooling in demand. For the full fiscal year ended June 30, 2025, revenue rose to $22.0 billion from $15.0 billion the previous year, yet net income declined to $1.0 billion or $1.68 per diluted share, down from $1.2 billion or $1.92 per share. Non-GAAP gross margin stood at 11.2% after adjustments for $25 million in stock-based compensation, with non-GAAP net income at $1.3 billion or $2.06 per diluted share, compared to $2.12 last year. Adjustments factored in a $239 million loss from extinguishing convertible notes and $75 million in related tax effects, plus a $23 million write-off and $8 million in additional tax impacts. As of June 30, the company held $5.2 billion in cash and equivalents against $4.8 billion in total bank debt and convertible notes.

The earnings report, released after market close, painted a picture of resilience amid challenges. Super Micro’s ties to the AI boom have been a key driver, with servers supporting high-performance computing needs. However, the 55% year-to-date stock gain prior to this report now faces scrutiny as growth moderates. Experts from financial analysis firms like Bloomberg Intelligence have observed that while AI infrastructure remains a growth area, execution risks and supply chain delays are testing leaders like Super Micro. “The market is pricing in a temporary hiccup, but sustained misses could erode investor confidence,” noted one industry analyst in post-earnings commentary.

Frequently Asked Questions

What was Super Micro’s revenue guidance for Q1 fiscal 2026?

Super Micro guided for net sales between $6.0 billion and $7.0 billion in the first quarter of fiscal 2026, ending September 30, 2025. This projection assumes GAAP earnings per diluted share of $0.30 to $0.42 and non-GAAP earnings of $0.40 to $0.52, factoring in tax rates of 13.0% to 15.5% and share counts of 631 million to 644 million, including $69 million in stock-based compensation and $20 million in excluded tax effects.

Why did Super Micro’s profit margins shrink in fiscal 2025?

Super Micro’s profit margins narrowed due to increased costs from stock-based compensation, a $239 million loss on extinguishing convertible notes, and related tax adjustments totaling $75 million. Non-GAAP gross margin was 11.2%, down slightly, while net income dropped 17% year-over-year to $1.0 billion, reflecting higher operational expenses amid revenue growth in AI servers. This trend underscores the pressures of scaling in a competitive tech landscape.

Key Takeaways

• Q1 Revenue Miss: Super Micro reported $5.02 billion, 16% below expectations, due to delayed shipments and a 15% yearly decline, impacting stock value immediately.
• Optimistic Q2 Outlook: Guidance raised to $10-11 billion, driven by deferred Q1 orders, signaling potential recovery in AI server demand.
• Long-Term Growth Projection: Fiscal 2026 revenue expected at least $33.0 billion; investors should monitor competition and execution for sustained profitability.

Conclusion

The Super Micro earnings miss underscores vulnerabilities in the AI server market, with Q1 fiscal 2025 results revealing revenue shortfalls and margin pressures despite overall yearly growth to $22.0 billion. As the company eyes a robust Q2 and $33.0 billion for fiscal 2026, factors like design delays and competitive shifts from Dell will shape its trajectory. Investors tracking Super Micro stock plunge dynamics should watch upcoming quarters for signs of rebound, positioning portfolios for tech sector volatility ahead.