Super Micro Computer finds itself at a critical juncture. The company’s stock, trading around $34.69, is under intense scrutiny as investors weigh an exceptionally bold annual revenue target against a surprisingly weak quarterly performance. Management’s promise hinges on a dramatic second-half recovery.
A Disappointing First Quarter
The server and storage solutions provider reported financial results for its first quarter of fiscal year 2026, ended September 30, 2025, that fell short of expectations across key metrics:
- Revenue came in at $5.02 billion, marking a 15.5% year-over-year decline.
- The gross margin contracted significantly to 9.3%, down from 13.1% in the prior-year period.
- Adjusted earnings per share were $0.35, missing the consensus estimate of $0.46.
- Operating cash flow was deeply negative at -$918 million.
Company leadership attributed the compressed margin to an unfavorable product mix and increased production costs. The revenue drop, however, delivered an unexpected blow to shareholder confidence.
The Ambitious $36 Billion Pledge
Despite the quarter’s shortcomings, CEO Charles Liang has reaffirmed a full-year revenue forecast of at least $36 billion. This represents a projected increase of approximately 64% over the prior year’s revenue of about $22 billion.
This optimism is reportedly fueled by a substantial order backlog. The company states it has over $13 billion in orders for its Blackwell Ultra systems on the books. Management characterizes the Q1 weakness as a timing issue, asserting that deliveries were simply pushed into later quarters and that underlying demand remains robust.
All Eyes on Q2 Performance
The current second quarter, ending December 31, 2025, now serves as a crucial litmus test. Super Micro has provided guidance for revenue between $10 billion and $11 billion, which would represent a near-doubling from the previous quarter. Adjusted EPS is projected to be in the range of $0.46 to $0.54.
Should investors sell immediately? Or is it worth buying Super Micro Computer?
Hitting these targets is paramount. A miss would further erode management’s credibility, while achieving them could restore investor faith and provide momentum for the stock.
Financial Moves and Insider Selling
Earlier this year, the firm bolstered its balance sheet by issuing convertible notes worth approximately $2.3 billion. While this infusion provides operational flexibility, it also carries potential dilution risk for existing shareholders.
In a separate development that raised eyebrows, CFO David E. Weigand sold 25,000 of his personal shares in September. Against the backdrop of negative cash flow and margin pressure, this move has been viewed with skepticism by some market participants.
The Path Forward
The stock’s current valuation reflects the prevailing uncertainty. Based on the ambitious $36 billion forecast, the shares trade at a price-to-sales multiple of roughly 0.6, which appears inexpensive. However, this valuation is entirely contingent on the company executing its promised turnaround.
The December quarter results will be highly revealing. They will indicate whether the delayed orders are materializing as planned or if more structural challenges are at play. For Super Micro Computer, the coming months represent a definitive “prove it” moment.
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