Super Micro Stock (SMCI) Down 50%+ From YTD Highs As EPS Misses & Margin Narrows

Super Micro Computer stock (NASDAQ: SMCI) faced a turbulent start to the day as the price gapped down on the open despite the company offering an optimistic outlook for the current quarter.

SMCI stock is down almost 15% on the day, and sits at less than 50% of it's YTD high. With such a pullback, we take a look at the numbers causing concern.

Results fell shy of analysts' expectations and are supported (or not so) by a gross margin that underperformed forecasts, placing the company in a delicate position with investors.

Super Micro reported earnings of $6.25 per share on sales of $5.31 billion for its fourth quarter, which did not meet the anticipated earnings set by Wall Street. Analysts had projected a stronger performance from the server and storage technology firm. More disheartening for investors was the gross margin for the quarter, which arrived at 11.3%, a figure significantly lower than the estimated 14.7%. However, despite the less-than-stellar quarter, Super Micro remained committed to achieving a long-term gross margin goal that hovers between 14% and 17%.

On a more encouraging note, the company provided forward-looking guidance that was received warmly. For its fiscal first quarter, SMCI estimated robust non-GAAP net income per diluted share in the range of $6.69 to $8.27—numbers that lie above average Wall Street estimates. Additionally, sales projections were set between $6.0 billion and $7.0 billion, indicating a healthy growth trajectory

A key strategic move from Super Micro includes a 10-for-1 forward split of its common stock, slated to go into effect from October 1. Such a move typically signals the company's confidence in its future, making its shares more accessible to a broader base of investors and potentially increasing market liquidity.

Looking further down the line, the company forecasted net sales between $26.0 billion and $30.0 billion for the fiscal year 2025. Although this forecast falls below analysts' expectations of $33.54 billion, the company attributed it to the record demand for new AI infrastructures—an area where Super Micro is strongly positioned.

Despite these forecasts, the reaction from the market was underscored by the assessment from KeyBanc Capital Markets' analysts who maintained a Sector Weight rating on SMCI stock. They pointed out the premium valuation of Super Micro, attributing it to the company's dynamic growth and dominant position in AI infrastructure.

As the market digests Super Micro's financial performance and strategic moves, investors and analysts alike will be keenly watching the company's progress towards its long-term financial goals and its continued expansion in the high-demand field of AI infrastructure.