Super Micro Computer’s shares dropped more than 9% in premarket trading on Wednesday after the company reported weaker-than-expected quarterly results.
The artificial intelligence (AI)-focused server manufacturer missed Wall Street’s estimates for both profit and revenue, attributing the shortfall to delayed GPU rack deliveries linked to “design win upgrades.”
The company said that roughly $1.5 billion in expected first-quarter revenue will now be recognized in the current period after a major customer requested configuration changes to its GPU systems.
Complex GPU Designs Cause Delays
Chief Executive Officer Charles Liang explained that the setback was primarily due to the intricate nature of the company’s latest GPU rack systems.
“The delays were largely caused by the complexity of these new graphics processing unit racks, which require intricate integration, testing, and validation,” Liang said.
The slowdown underscores the challenges facing the AI hardware market, where rapid technological advances often complicate production and deployment timelines.
Analysts Warn of Margin Pressure in AI Boom
J.P. Morgan analysts commented that while AI computing offers major growth opportunities, the race to capture market share has pressured profitability.
“The profit opportunities have been dramatically different than the revenue opportunities in AI compute, with AI server leaders continuously sacrificing margins to participate in large deals, leaving limited profit upsides for investors to cheer about,” the analysts wrote.
Super Micro has emerged as one of the leading players in the AI infrastructure race, supplying high-performance systems to data centers worldwide.
Its close relationship with Nvidia has made it a preferred partner for rapid deployment of new GPU architectures.
Nvidia Partnership Strengthens Competitive Edge
The company’s collaboration with Nvidia allows it to bring fully integrated systems to market faster than competitors.
This includes the upcoming Nvidia Blackwell Ultra series, which has become a key driver behind Super Micro’s $13 billion GB300 order book.
By securing early access to these new architectures, Super Micro has positioned itself as a critical supplier for AI data center expansion.
However, analysts at Susquehanna cautioned that the company’s aggressive pursuit of low-margin contracts could weigh on future profitability.
“Super Micro’s pursuit of lower-margin business and deep ASP discounts to secure GB300 orders were not adequately reflected in the current valuation,” the firm said.
Outlook Remains Strong Despite Setback
Despite the missed targets, Super Micro raised its full-year revenue forecast to at least $36 billion, up from its previous estimate of $33 billion.
The company also projected second-quarter revenue between $10 billion and $11 billion, far exceeding analysts’ expectations of $7.83 billion.
Super Micro’s stock has gained nearly 56% so far this year, supported by robust demand for AI servers and data center hardware.
The stock trades at a price-to-earnings ratio of 16.94, compared with 9.75 for Hewlett Packard Enterprise and 14.11 for Dell Technologies, underscoring investor optimism despite short-term execution risks.
