Super Micro Computer (SMCI) is experiencing challenges after Mizuho Securities lowered its stock price target to $34 from $50. This change comes due to weak early results and delays in customer orders.
Super Micro expects its revenue for Q3 to be around $4.55 billion and earnings per share (EPS) of $0.30. These figures are much lower than the consensus estimates of $5.35 billion in revenue and $0.53 EPS. Previously, the company had forecasted $5.50 billion in revenue and $0.54 EPS.
The company’s gross margin fell by 220 basis points from the previous quarter to 9.6%, which is below the 12.0% expected. This decline was due to higher inventory costs and increased shipping expenses.
The company has also reduced its guidance for the full fiscal year 2025, cutting revenue expectations by 7% and EPS by 14%. For fiscal 2026, guidance was lowered by 4% for revenue and 17% for EPS.
Super Micro noted delays in customer orders in its Tier 2, Enterprise, and other segments, but activity is expected to improve in the June quarter.
Despite this setback, analysts still see Super Micro as an important player in the AI server market. However, the rising competition from Dell Technologies, which has a favorable rating and a $140 target, puts additional pressure on Super Micro.
The combination of lower expectations and increased competition may limit short-term growth. Super Micro will report its full Q3 results and discuss earnings on May 6, which could provide more insight into order levels and recovery plans.