Super Micro Computer, Inc. (Supermicro) reported mixed results for its fiscal third quarter of 2025, highlighting both ongoing growth in AI infrastructure and significant near-term challenges.
Q3 2025 Financial Highlights
- Revenue: $4.6 billion, up 19% year-over-year, but down 19% sequentially from the previous quarter. This figure missed analyst expectations, which had forecast revenue of around $5.05–$5.42 billion.
- Non-GAAP EPS: $0.31, slightly above the consensus forecast of $0.30, but well below last year’s $0.66.
- Gross Margin: 9.7%, a decline of 220 basis points quarter-over-quarter and 590 basis points year-over-year, reflecting margin pressure due to inventory reserves, lower volumes, and accelerated costs for new product rollouts.
- Net Income: GAAP net income was impacted by stock-based compensation and a loss on extinguishment of convertible notes.
- Cash Flow: $627 million generated from operations, with a closing cash position of $2.54 billion and net cash of $44 million after accounting for $2.49 billion in debt.
Business and Market Trends
- AI GPU Platforms: Over 70% of Q3 revenue came from AI GPU platforms, reinforcing Supermicro’s strategic focus on AI infrastructure.
- Geographic Mix: The US accounted for 60% of revenue, Asia 30%, Europe 6%, and the rest of the world 4%. Asia saw a 77% year-over-year increase, while Europe declined 3%.
- Customer Delays: CEO Charles Liang noted that some customers delayed platform decisions, impacting near-term results. However, he expects many of these commitments to materialize in the June and September quarters.
Guidance and Outlook
- Q4 2025 Guidance: Supermicro projects revenue between $5.6 billion and $6.4 billion and non-GAAP EPS of $0.40 to $0.50. Both figures are below Wall Street expectations, with analysts looking for $6.82 billion in revenue and $0.69 EPS.
- Full-Year Forecast: Fiscal 2025 revenue is now expected to range from $21.8 billion to $22.6 billion, reflecting a $2 billion cut from previous forecasts.
- Challenges: The company cited ongoing economic uncertainty, customer decision delays, and the impact of new US tariffs as key headwinds. Gross margin pressure is likely to persist in the near term.
Strategic Position
Despite short-term volatility, Supermicro remains optimistic about its long-term prospects, driven by its leadership in AI server platforms and ongoing investments in manufacturing capacity and liquid cooling technology. The company’s US-based manufacturing is seen as a potential advantage amid global supply chain disruptions and shifting trade policies.
Market Reaction
Following the results and cautious outlook, Supermicro’s shares experienced notable volatility, with a decline in after-hours trading reflecting investor concerns about the revenue miss and lower guidance.