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Investing.com -- Shares of Super Micro Computer Inc (NASDAQ:SMCI) slumped almost 10% in premarket trading Wednesday after the company reported fiscal Q1 results that fell short of expectations, despite boosting revenue guidance for the current quarter and full year.
The company missed analysts’ estimates on both earnings and top-line performance, raising questions about near-term demand execution even as longer-term AI infrastructure bets remain in focus.
Supermicro reported non-GAAP earnings per share of $0.35 for the quarter ending Sept. 30, below consensus estimates of $0.46. Revenue came in at $5.02 billion, far below the $5.8 billion expected by analysts, down from $5.9 billion in the year-ago quarter and in-line with $5.8 billion reported in the prior quarter.
Gross margin for the quarter narrowed to 9.3%, a sequential dip from 9.5% and well below the 13.1% recorded a year earlier. Operating income fell sharply to $182.3 million from $509.2 million last year, with R&D expenses jumping to $173.3 million from $132.2 million in the year-ago period, reflecting continued investment in AI and datacenter offerings.
CEO Charles Liang remained upbeat despite the weak quarter-end numbers, citing escalating demand in large-scale infrastructure deployments. “With a rapidly expanding order book, including more than $13B in Blackwell Ultra orders, we expect at least $36 billion in revenue for fiscal year 2026,” Liang said in a statement accompanying the release.
While Q1 results disappointed, Supermicro raised its Q2 revenue outlook to $10.0–$11.0 billion, sharply higher than the $7.9 billion average Wall Street estimate, a signal of accelerating backlog conversion. Guidance for Q2 non-GAAP EPS was set between $0.46 to $0.54, below the $0.62 consensus but pointing to strong sequential growth from Q1.
The company continues to emphasize its transformation into a fully integrated AI and datacenter solution provider, leveraging key partnerships with chip suppliers such as NVIDIA and AMD. AI-related demand figures prominently in the order backlog and product roadmap, particularly as enterprise and hyperscaler clients ramp up next-generation infrastructure spending.
Still, investors appear cautious following the report, particularly as order execution lags visibility into demand and cash flow from operations shifted to a notable $918 million outflow during the quarter. Supermicro ended the quarter with $4.2 billion in cash and $4.8 billion in bank debt and convertible notes, offering balance sheet flexibility but highlighting increased working capital intensity.
As the company pivots toward massive infrastructure opportunities around AI and datacenter transformation, Wall Street is likely to scrutinize execution risks and margin trajectory. For now, the elevated guidance provides support, but the near-term volatility underscores the pressure Supermicro faces in aligning its operational output with burgeoning customer demand.
(Luke Juricic contributed to this report.)