(Reuters) – Shares of Supermicro dropped over 9% in pre-market trading on Wednesday after the AI-focused server manufacturer fell short of expectations for its quarterly profits and revenue. The company pointed to delivery delays stemming from design adjustments.
Supermicro noted that “design win upgrades” increased its projected first-quarter revenue by around $1.5 billion this quarter, driven by numerous customer requests for configuration changes in their graphics processing unit (GPU) racks.
According to CEO Charles Liang, the delays can largely be attributed to the complexity involved in integrating, testing, and validating these new GPU racks.
JPMorgan analysts remarked, “The profit opportunities in AI computing are significantly different, and as leaders in the AI server industry continue to sacrifice margins for large-scale deals, there’s not much for investors to feel optimistic about.”
Super Micro has positioned itself as a key player in the surge of AI servers, providing high-performance systems to data centers aiming to expand. While the company is experiencing rapid growth and a close partnership with Nvidia has drawn investor interest, analysts caution that the fast pace of the sector poses execution risk and margin instability.
Thanks to its strong collaboration with Nvidia, Supermicro has been able to launch fully integrated systems based on new GPU architectures, including Nvidia’s Blackwell Ultra series, which has been pivotal to the company’s $13 billion GB300 order, solidifying its role in the AI infrastructure competition.
Susquehanna analysts pointed out that Supermicro’s focus on low-margin enterprises and significant average selling price (ASP) discounts to secure GB300 orders isn’t entirely reflected in its current market valuation.
The company has raised its annual sales forecast to at least $36 billion, up from $33 billion. It anticipates second-quarter sales between $10 billion and $11 billion, which significantly exceeds Wall Street’s expectation of $7.83 billion.
So far this year, Supermicro’s stock has increased nearly 56%, and it currently trades with a price-to-earnings ratio of 16.94, in contrast to 9.75 for Hewlett Packard Enterprise and 14.11 for Dell Technologies.
