Super Micro’s Quarterly Revenue Falls Short of Estimates, Inventory Increases, Shares Drop by 14%

Super Micro Computer, a leading artificial intelligence server maker, reported third-quarter revenue below estimates due to a shortage of crucial components and concerns over the profitability of a new line of servers. Despite this, the company remains optimistic about fourth-quarter revenue and steady demand.

Shares of Super Micro plummeted by 14% in after-hours trading, reflecting investor concerns over the company’s ability to navigate the challenges posed by the component shortage and the transition to new Nvidia chips that require liquid cooling.

CEO Charles Liang assured analysts that the company’s in-house liquid cooling technology would help it gain market share in a competitive industry. However, questions remain about whether customers will be willing to pay a premium for these new servers.

Super Micro’s inventory at the end of the March quarter stood at $4.12 billion, a significant increase from the previous fiscal year. Despite the challenges, the company aims to maintain its gross margin range of 14% to 17% over the long term.

Looking ahead, Super Micro expects fourth-quarter revenue to be between $5.1 billion and $5.5 billion, surpassing analyst estimates. The company also raised its annual sales forecast, reflecting confidence in its ability to overcome current challenges and meet growing demand for AI servers.

Overall, while Super Micro faces obstacles in the short term, its long-term outlook remains positive as it continues to innovate and adapt to the evolving needs of the AI server market.