Super Micro Beats Annual Sales Outlook, Misses Quarterly Estimates on AI Server Costs

Despite exceeding analysts` annual sales predictions by billions, Super Micro Computer Inc. experienced a stock drop exceeding 10% after their quarterly revenue and profit fell short of expectations. The company`s fourth-quarter earnings per share and revenue missed both their own projections and analysts` estimates.

Although a surge in demand for AI-powered equipment boosted sales, concerns linger among investors regarding the long-term profitability of these specialized servers. The company`s recent failure to meet its own profitability goals further amplified these worries.

Executives outlined a strategy to achieve their standard gross margin target range as they expand their supply chain and production capabilities. They attributed the lower-than-expected gross margin to dealings with a major cloud provider and increased production of liquid-cooled servers, which necessitated supply chain investments.

Initially, the company`s stock surged in extended trading based on the annual forecast, but it reversed course and declined after the release of the quarterly results.