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Investing.com — Super Micro delivered Tuesday upbeat revenue guidance for the current quarter while Q4 earnings missed estimates and the data center company announced a stock split as it looks to capitalize on growing demand for artificial intelligence hardware used to power AI applications.
SMCI also reported worse-than-expected gross margins for the fourth quarter, sending its shares tumbling around 12% in premarket trading Wednesday.
The company announced a 10-for-1 forward split of its common stock, expected to start trading on Oct. 1.
For fiscal Q1, non-GAAP net income per diluted share was estimated in a range of $6.69 to $8.27 on sales of $6.0 billion to $7.0 billion, compared with Wall Street estimates for $7.58 on revenue of $5.45B, respectively.
The better-than-expected guidance follows earnings that fell short of analyst estimates in Q4.
For the quarter ended Jun. 30, the company, which counts Nvidia (NASDAQ:) among its customers for servers, reported adjusted earnings of $6.25 share on sales of $5.31 billion Analysts polled by Investing.com had expected earnings of $8.1 a share on sales of $5.31 billion.
SMCI’s gross margin (GM) for the quarter stood at 11.3%, marking a multi-year low, and was notably below the analyst estimates of 14.7%. However, the company reiterated its long-term gross margin goal of 14-17%, implying a strong ramp in the second half of the year.
Looking ahead to fiscal year 2025, the company guided net sales between $26.0B and $30.0B, compared with estimates for $33.54B.
„Supermicro continues to experience record demand of new AI infrastructures,” the company said.
Following the report, KeyBanc Capital Markets analysts reiterated a Sector Weight rating on the stock „with shares trading in the after hours at ~20x our increased CY24 EPS, which is a premium to the low double-digit GM% cohort of mid-teens.”
„We feel this premium encompasses the Company’s dynamic growth and dominant industry position in building out AI infrastructure,” they added.
Separately, Bank of America downgraded the stock from Buy to Neutral citing anticipated margin pressures.
„While the l-t benefit from AI remains intact, we move to a Neutral rating, from Buy, as we see the next several quarters remaining margin challenged as SMCI navigates a competitive pricing environment, delayed shipment of Blackwell GPU systems that require liquid cooled racks (higher margin), and on-going issues with component availability,” they said.
The Bank also cut its price target on SMCI shares to $700 from $1,090
Yasin Ebrahim contributed to this report.
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