Jamie Spencer
Super Micro Computer (SMCI) saw its stock drop nearly 6% midday Wednesday after the company revised its full-year revenue guidance for 2025, citing the ongoing economic uncertainty exacerbated by President Trump’s global trade war and increasing competition in the AI server market.
Tariff Impact and Macroeconomic Uncertainty
Super Micro, which is based in the U.S. but operates manufacturing facilities in Taiwan and the Netherlands, is directly impacted by Trump’s new 10% global tariffs. These tariffs have compounded the company’s challenges, particularly as the president pursues additional tariffs on semiconductors, a critical component in Super Micro’s AI servers. The company now expects its full-year revenue to fall between $21.8 billion and $22.6 billion, a significant drop from its previous forecast of $23.5 billion to $25 billion.
Declining Profit Margins Amid Economic Headwinds
Chief Financial Officer David Weigand highlighted that due to the “dynamic environment” and the impact of tariffs, Super Micro’s gross margin will likely fall to around 10% for 2025, compared to 14% in fiscal 2024 and 18% in 2023. This drop reflects the strain from both external economic factors and the increasing competition in the server market, particularly from servers incorporating Nvidia’s latest Blackwell AI GPUs.
AI Market and Competition Challenges
Super Micro’s servers, equipped with Nvidia’s AI chips, are a key offering in the growing AI market. However, competition has heated up, and the rise of Nvidia’s new GPUs has led to price pressure in the server market. Additionally, production delays of Nvidia’s Blackwell GPUs, which customers were eagerly awaiting, impacted Super Micro’s third-quarter performance. The company reported revenue of $4.6 billion, below Wall Street’s expectations of $4.76 billion, and adjusted earnings per share of $0.31, lower than the expected $0.37.
Concerns Over Financial Stability and Accounting Practices
Super Micro has also faced scrutiny over its accounting practices, leading to a drop in investor confidence. A report from short-selling firm Hindenburg Research accused the company of accounting violations and issues with export controls, which contributed to fears of potential delisting from the Nasdaq. The company has since rectified its accounting issues and submitted delayed regulatory filings to the U.S. Securities and Exchange Commission in late April.
Outlook for Growth Amid Uncertainty
Despite the setbacks, CEO Charles Liang remains optimistic, stating that Super Micro’s business will continue to grow much faster in the coming quarters. However, uncertainty surrounding tariffs, competition, and its financial practices casts doubt on the company’s near-term performance. As of the close on Tuesday, Super Micro’s stock was down nearly 39% in 2025.
The combination of external economic factors, competition, and internal financial concerns has put pressure on Super Micro’s stock, even as the company continues to expand within the AI and server markets. The future of the company hinges on overcoming these challenges, including navigating the impacts of tariffs and proving the sustainability of its growth in a highly competitive industry.
