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Investing.com -- Shares in Super Micro Computer (NASDAQ:SMCI) fell sharply in premarket U.S. trading on Wednesday after the company’s slashed its third-quarter guidance.
The server manufacturer cited delays in customer platform decisions, which have pushed expected sales into the fourth quarter.
Super Micro, known for providing IT solutions for various high-tech sectors, shared unaudited preliminary financial results for its third quarter of fiscal year 2025, which concluded on March 31. The company said robust design wins for new generation products were overshadowed by the deferral of certain customer decisions, resulting in sales being postponed.
The updated guidance indicates that net sales are expected to range between $4.5 billion to $4.6 billion, with diluted net income per common share at $0.16 to $0.17 and adjusted diluted net income per common share at $0.29 to $0.31. This represents a significant reduction from the previous guidance, which projected net sales of $5.0 billion to $6.0 billion and an unadjusted diluted net income per common share of $0.36 to $0.53, alongside an adjusted diluted net income per common share of $0.46 to $0.62.
The revised figures fell short of market expectations, with consensus estimates previously targeting third quarter per-share income of $0.54 on revenue of $5.41 billion. Additionally, the company’s adjusted and unadjusted gross margin for the third quarter was 220 basis points lower than the second quarter, primarily due to higher inventory reserves for older generation products and expedite costs associated with the launch of new products.
Super Micro’s announcement comes as investors have worried that punishing U.S. tariffs could lead to a pullback in spending by some clients on building out their artificial intelligence infrastructure. Concerns had already been swirling around heavy tech-sector AI expenditures, particularly after the emergence of a low-cost AI model from Chinese start-up DeepSeek earlier this year.
Meanwhile, Super Micro has grappled with its own internal challenges, including accounting issues that almost led to a potential delisting.
In a note to clients, analysts at Mizuho (NYSE:MFG) said that while Super Micro is expected to "drive the tip of the spear" in cutting-edge servers, " aggressive pricing from increasing competition, DeepSeek worries, and tariffs all could impact share/margins."
(Scott Kanowsky contributed reporting.)