Super Micro's Weak Profit Fuels AI Server Margin Anxieties

(Bloomberg) -- Super Micro Computer Inc. reported quarterly revenue and profit that missed analysts’ estimates, outweighing an annual sales outlook that was billions above Wall Street projections.

Most Read from Bloomberg

• Africa’s Richest City Needs $12 Billion to Fix Infrastructure

• New York City’s Outdoor Dining Sheds Will Start Disappearing

• Singer Akon’s Multibillion-Dollar Futuristic City in Africa Gets Final Notice

• The 5 Coastal States That Face the Most Devastating Flood Risk

• Paris Spent €1.4 Billion to Clean Up the Seine. Has It Worked?

Profit, excluding some items, was $6.25 a share in the period ended June 30, the company said Tuesday in a statement. That’s short of Super Micro’s previous forecast and the $8.25 average analyst estimate. Sales were $5.31 billion, compared with an average projection of $5.32 billion, according to data compiled by Bloomberg.

A jump in demand for the equipment that powers artificial intelligence training and applications has helped drive sales at San Jose, California-based Super Micro, which makes data center servers. “We are well-positioned to become the largest IT infrastructure company,” Chief Executive Officer Charles Liang said in the statement.

The company forecast revenue of $26 billion to $30 billion in the fiscal year ending June 30, 2025. Analysts, on average, estimated $23.6 billion.

Still, investors are worried about the longer-term profitability of AI-optimized servers sold by companies like Super Micro, Dell Technologies Inc., and Hewlett Packard Enterprise Co., said Woo Jin Ho, an analyst at Bloomberg Intelligence. Super Micro missing its own profitability targets in the recent quarter will likely fuel these anxieties, he said.

The shares first jumped as much as 18% in extended trading on the forecast, before reversing and dropping about 8% at 4:55 p.m. in New York. The stock earlier closed at $616.94.

For more: Big Tech Fails to Convince Wall Street That AI Is Paying Off

Super Micro also announced a 10-for-1 stock split, with trading beginning Oct 1. The shares have more than doubled in value this year and been added to the S&P 500 and Nasdaq 100 indexes following increased demand for servers. Still, the stock has declined about 48% from a peak in March.

(Updates with additional context throughout.)

Most Read from Bloomberg Businessweek

• Made-in-China Goes Upscale as a New Generation of Brands Battles Slowdown

• Mark Zuckerberg Is Laughing at Zuck Memes, Too

• How a Hip-Hop Pioneer Turned Breaking Into a Business

• Forty-Eight Hours at the MAGA-fied Crypto Lovefest

• Retailers Locked Up Their Products—and Broke Shopping in America

©2024 Bloomberg L.P.