Far exceeds expectations! Super Micro Computer, Inc. (SMCI.US) quarterly revenue approaches $19.5 billion, Wall Street hails it as a "clear positive signal"

Artificial intelligence (AI) server manufacturer Super Micro Computer, Inc. (SMCI.US) released preliminary quarterly results ahead of schedule that significantly exceeded Wall Street expectations, reflecting that the current AI infrastructure investment boom is still driving rapid growth in server demand. According to a statement released by Super Micro Computer, Inc., the company expects revenue for the quarter ended September 30 to be between $18.5 billion and $19.5 billion, well above the analyst average estimate of $15 billion. Based on the midpoint of the guidance range of $19 billion, expected revenue is about 26.7% higher than market expectations. At the same time, the company expects gross margin for the quarter to be between 12% and 12.5%. Although Super Micro Computer, Inc. has not yet released full quarterly financial data, the preliminary revenue performance already reflects strong demand in the AI server market. Wall Street analysts viewed the data as a "clear positive signal" and expect the company's stock price to rise on the back of the pre-announcement. According to Super Micro Computer, Inc., the company attributed the revenue beat to strong demand for AI platforms, while attributing the gross margin beat to a favorable customer and product mix. In response, JPMorgan noted that the revenue beat was partly anticipated by investors, as the pricing environment and major customers' data center investment plans provided clues, but the gross margin beat was a bigger surprise: the 12.0% to 12.5% level was above JPMorgan's forecast of 10.6% and the market consensus of 10.4%. The dual beat on revenue and gross margin means F1Q27 earnings per share will be significantly higher than JPMorgan's and the market consensus estimate of $1.05. However, JPMorgan cautioned that F1Q27 gross margin is still significantly lower than F4Q26's 17.6%; F4Q26 benefited from several contract deferrals, lower tariff costs, and inventory reserves, while F1Q27 gross margin is higher than the 9.5% in the same period last year, with management saying the underlying business mix is better than previously expected. Investors remain focused on the specific drivers behind the gross margin beat and whether this margin level can be sustained. Currently, JPMorgan maintains a "Neutral" rating on Super Micro Computer, Inc. Super Micro Computer, Inc. has not yet updated its FY27 guidance, which previously projected total revenue of $65 billion to $72 billion. The company also said at last quarter's earnings call that the F4Q26 cash conversion cycle was 149 days and is expected to improve, but if revenue exceeds $80 billion, it may need to seek external financing. The company is expected to hold its earnings conference call after market close on November 3. At the industry chain level, Goldman Sachs Group, Inc. believes that strong demand for Super Micro Computer, Inc.'s AI platforms constitutes a positive read-through for Dell Technologies, Inc. Class C (DELL.US), and sees upside to Dell Technologies, Inc. Class C's F2027 (the 12 months ending January 2027) AI server sales target of $74 billion. JPMorgan also believes the results are a positive read-through for peers such as Dell Technologies, Inc. Class C and Hewlett Packard Enterprise Co. (HPE.US). Wedbush also mentioned in a research note the positive implications of the data for NVIDIA Corporation (NVDA.US) and the storage and hard disk drive (HDD) sectors. Wedbush analyst Matt Bryson said Super Micro Computer, Inc.'s revenue was about $4 billion above previous guidance, and gross margin was also above the guidance range, making it overall a "clear positive signal." However, Goldman Sachs Group, Inc. continues to maintain a "Sell" rating on Super Micro Computer, Inc. with a price target of $34, while Wedbush gives it a "Neutral" rating with a price target of $40.