Super Micro Computer Earnings Badly Missed Forecasts. How Should You Play SMCI Stock Here?

Super Micro Computer (SMCI) lost as much as 20% on Wednesday, April 30 after reporting disappointing preliminary financials for its fiscal third quarter as “some delayed customer platform decisions moved sales into Q4.”

The preliminary results suggest that SMCI brought in $4.55 billion in revenue at the midpoint and earned about $0.30 on a per-share basis in its fiscal Q3. Analysts, in comparison, had called for a much higher $5.5 billion and $0.54 a share, respectively. 

Including today’s decline, Supermicro stock is down some 50% versus its year-to-date high in February. 

SMCI Stock Tanks on Devastating Q3 Earnings

SMCI shares are headed for their worst day in about six months following its earnings release that said “higher inventory reserves resulting from older generation products” weighed significantly on the company’s Q3 performance. 

Note that Supermicro’s preliminary revenue for the third quarter translates to about 18% growth on a year-over-year basis, which is far below what investors have come to expect from AI stocks. 

In fact, Super Micro Computer itself recorded a whopping 200% annualized growth in revenue in the same quarter last year. 

SMCI stock is crashing this morning also because the AI server company’s gross margin also declined by 220 basis points sequentially in its fiscal Q3. 

Mizuho Announces a Massive Cut to Its Supermicro Stock Price Target

Supermicro’s preliminary third-quarter results made Mizuho analyst Vijay Rakesh lower his price target on the San Francisco headquartered firm today by more than 30%. 

In his research note, the analyst said SMCI seems to be losing share against rivals, including Dell Technologies (DELL).  

Plus, the ongoing DOJ investigation related to delayed filings and allegations of accounting malpractice last year warrants a discounted multiple on Supermicro shares, he added. 

That said, Rakesh’s downwardly revised $34 price target on SMCI stock still signals potential for about a 10% gain from current levels. 

Are Other Analysts Bearish on Super Micro Computer?

While Super Micro Computer’s preliminary Q3 update could make analysts reevaluate their views on SMCI stock, heading into Wednesday, Wall Street was largely bullish on the AI servers firm. 

The consensus rating on Supermicro shares currently sits at “Hold” but the mean target of about $54 suggests potential upside of about 80% from here.