Jamie Spencer
Super Micro’s Revenue Surges on AI Demand
Super Micro Computer Inc. (SMCI) posted impressive preliminary second-quarter fiscal 2025 results, with net sales reaching between $5.6 billion and $5.7 billion, a 54% year-over-year increase at the midpoint. The company’s strong performance was driven by increasing demand for AI-optimized server infrastructure, solidifying its position as a key supplier to NVIDIA (NVDA).
Following the announcement, Supermicro’s stock rose 4.06% to $40.18 as of 10:51 a.m. ET on February 12, reflecting investor confidence in its AI-driven growth strategy.
Mixed Profitability Metrics Raise Caution
While revenue growth remains strong, profitability showed a more modest uptick. Non-GAAP earnings per share (EPS) are expected between $0.58 and $0.60, reflecting a 5% annual increase, whereas GAAP diluted EPS is projected between $0.50 and $0.52, remaining flat year-over-year. Gross margins are estimated at 11.8% to 11.9%, signaling steady but cautious financial performance.
Lowered Full-Year Guidance Raises Questions
Despite robust second-quarter growth, Supermicro revised its full-year fiscal 2025 sales forecast downward, cutting expectations from the previous $26 billion-$30 billion range to $23.5 billion-$25 billion. The company also set third-quarter revenue projections between $5.0 billion and $6.0 billion, reflecting potential near-term volatility.
AI Infrastructure and Liquid Cooling Drive Growth
Chairman Charles Liang highlighted the company’s strategic focus on AI infrastructure, particularly direct-liquid cooling (DLC) technologies. He emphasized that DLC is expected to be adopted in over 30% of new data centers in the next year, further strengthening Supermicro’s market position.
Debt and Financial Position
As of December 31, 2024, Supermicro reported $1.4 billion in cash and cash equivalents, while total debt stood at $1.9 billion, including $1.7 billion in convertible notes. The company announced amendments to its 2029 convertible notes and a $700 million private offering of new 2.25% convertible senior notes due in 2028 to support its expansion plans.
Regulatory Scrutiny Continues
Supermicro acknowledged ongoing investigations by the Securities and Exchange Commission (SEC) and the U.S. Department of Justice related to allegations in an August 2024 short-seller report. The company stated that it is cooperating with document requests and dismissed related securities lawsuits as having little merit.
Looking Ahead: Opportunities and Risks
Supermicro’s strong position in AI infrastructure, particularly in collaboration with NVIDIA, presents a major growth opportunity. However, challenges remain, including regulatory scrutiny, financial uncertainties, and potential market volatility. Investors will be closely watching upcoming earnings reports and regulatory developments to gauge the company’s long-term trajectory.
