Super Micro Computer Inc. shares fell more than 10% in extended trading on Tuesday. The company reported quarterly revenue and profit that missed analysts’ estimates.
This overshadowed an annual sales outlook that was billions above Wall Street projections. Super Micro reported profit of $6.25 a share in the period ended June 30. This fell short of the company’s previous forecast and the $8.25 average analyst estimate.
Sales were $5.31 billion, slightly below the average projection of $5.32 billion. Demand for equipment powering artificial intelligence software has bolstered sales at Super Micro. The company manufactures data center servers.
It forecast revenue of $26 billion to $30 billion for the fiscal year ending June 30, 2025. Analysts, on average, estimated $23.6 billion. Investors remain concerned about the long-term profitability of AI-optimized servers sold by companies like Super Micro, Dell Technologies Inc., and Hewlett Packard Enterprise Co.
Super Micro shares fall after earnings
Super Micro missing its own profitability targets in the recent quarter is likely to exacerbate these anxieties. Executives outlined a plan to achieve their traditional gross margin target range of 14% to 17%.
The company is expanding its supply chain for new products and manufacturing capacity in Taiwan and Malaysia. Gross margin was above 11% in the fourth quarter. Margins were negatively affected by the company’s business with a large cloud service provider and a higher mix of new liquid-cooled servers.
“We are well-positioned to become the largest IT infrastructure company,” Chief Executive Officer Charles Liang said in a statement. The shares initially jumped as much as 18% in extended trading on the forecast but later reversed and dropped about 13%. The stock had earlier closed at $616.94.
Super Micro also announced a 10-for-1 stock split, with trading commencing on Oct. 1. The shares have more than doubled in value this year.
They have been added to the S&P 500 and Nasdaq 100 indexes due to increased demand for servers. Despite these gains, the stock has declined about 48% from a peak in March.
