AI Server Darling Super Micro Tanks After Forecast Shock--Is the Hype Cracking?

Super Micro Computer SMCI shares came under heavy pressure after the AI server maker failed to meet already-trimmed quarterly targets and delivered a softer outlook for the months ahead. The company projected adjusted earnings between 46 and 54 cents a share on revenue of $10 billion to $11 billion for the December quarter, short of analysts' expectations for 62 cents and $8.05 billion. Investors had been looking for signs that recent delays were behind the company, but the latest update suggested the recovery could still take time. The stock dropped as much as 10% in premarket trading on Wednesday, though it remains up more than 50% this year, reflecting continued investor optimism around AI-driven hardware demand.

The September-quarter numbers painted a similar picture of strain. Revenue declined 15% to $5 billion, with adjusted earnings of 35 cents a share, both below already-lowered forecasts. CEO Charles Liang acknowledged that competition remains intense, as Super Micro continues to price aggressively to win AI server deals in a crowded market. CFO David Weigand added that margins could narrow by three percentage points in the current quarter due to higher costs tied to a major design win and expanded engineering support for new AI customers. Management said its long-term focus remains on expanding higher-margin segments, though near-term profitability could stay under pressure as the company invests to lock in future growth.

The financial stumble adds to ongoing concerns about transparency and governance. Super Micro has been working to rebuild credibility since auditor Ernst & Young resigned in 2024 over accounting concerns, forcing delayed filings and an internal controls overhaul. The company had initially forecast $40 billion in annual sales as AI infrastructure spending surged, before trimming that figure to $33 billion and later revising it up again to at least $36 billion this week. The shifting guidance underscores both the enormous opportunity and the execution risk ahead, as Super Micro tries to balance rapid expansion with the discipline investors now expect from one of the market's most closely watched AI hardware players.