Super Micro Computer (SMCI) reported disappointing fiscal third-quarter results and issued weaker-than-expected forward guidance, sending its shares down nearly 5% to $31.33.
The Silicon Valley-based server maker, once a standout in the artificial intelligence (AI) hardware sector, continues to face mounting challenges from both macroeconomic headwinds and company-specific issues.
Q3 2025 Results Disappoint
- Earnings Miss: SMCI posted third-quarter earnings per share (EPS) of $0.31, well below Wall Street’s forecast of $0.50.
- Revenue Miss: Revenue came in at $4.60 billion, missing consensus estimates of $5.42 billion.
- Profit Decline: Net income dropped 66% year-over-year, falling to $109 million from $402 million in the same quarter last year.
- Gross Margin Pressure: Gross margin slipped to 9.6%, down from 11.8% in the prior quarter and 15.5% a year ago.
These results were in line with the company’s own preliminary guidance but still fell short of market expectations, reflecting delays in customer commitments as clients weigh platform choices between current and next-generation AI GPUs.
Guidance Cut and Ongoing Headwinds
- Full-Year Outlook Lowered: SMCI now expects fiscal 2025 revenue between $21.80 billion and $22.60 billion, down from its previous forecast of $23.5 billion to $25 billion.
- Q4 Guidance Weak: For the current quarter, the company projects sales of $5.60 billion to $6.40 billion and EPS of $0.40 to $0.50, both well below analyst expectations of $6.65 billion in revenue and $0.66 EPS.
Management cited economic uncertainty, the impact of new US tariffs on global manufacturing (including facilities in Taiwan and the Netherlands), and intense competition from rival AI server makers as key reasons for the weaker outlook.
CEO Charles Liang noted that some customers are delaying orders due to uncertainty around new tariffs and the transition between Nvidia’s Hopper and upcoming Blackwell GPUs.
Company Challenges and Market Reaction
Super Micro Computer’s stock has declined 60% over the past 12 months, a dramatic reversal after its initial surge as an AI hardware leader. The company has also faced scrutiny following an accounting scandal last year, which led to a change in auditors and delayed financial reporting.
CFO David Weigand warned that gross margins are likely to remain under pressure, now expected around 10%, down from over 14% last year and 18% in 2023. The company declined to provide guidance for fiscal 2026, citing ongoing tariff uncertainty.
Bottom Line
Super Micro Computer’s latest results underscore the challenges facing the company as it navigates a tougher economic environment, shifting technology cycles, and regulatory headwinds.
With earnings and revenue both missing targets and guidance falling short, investor sentiment remains cautious as the company works to regain momentum in the competitive AI server market.