Super Micro Computer Inc (NASDAQ:SMCI) shares fell more than 7% after it reported fiscal first quarter 2026 results that came in below Wall Street expectations, with both revenue and earnings down from the prior year.
For the quarter ended September 30, 2025, the company posted net sales of $5 billion, down from $5.9 billion in the year-ago quarter and below analyst estimates of around $6 billion.
Net income fell to $168 million, or $0.26 per diluted share, compared with $424 million, or $0.67 per share, in the same period last year. Adjusted earnings per share (EPS) were $0.35, missing consensus projections of about $0.40.
Gross margin slipped to 9.3%, compared with 13.1% in the prior year, reflecting continued pricing pressure and higher costs.
For the fiscal second quarter ending December 31, 2025, Supermicro expects revenue between $10 billion and $11 billion, well above the market’s average forecast of $7.8 billion. However, it guided for adjusted earnings per share in the range of $0.46 to $0.54, below expectations of $0.61.
The company also raised its full-year fiscal 2026 revenue outlook to at least $36 billion, up about 64% year over year.
“Powered by DCBBS, Supermicro is expanding/transforming into a leading AI and datacenter infrastructure company, delivering total solutions that simplify deployment, accelerate time-to-market, and reduce TCO," Supermicro CEO Charles Liang said.
“With a rapidly expanding order book, including more than $13B in Blackwell Ultra orders, we expect at least $36 billion in revenue for fiscal year 2026.”
A margin story
Analysts at Wedbush maintained a ‘Neutral’ rating on Supermicro shares following the results, highlighting that the company’s performance remains primarily a margin story rather than a revenue story.
The firm noted that while Supermicro’s fiscal 2026 sales target of over $36 billion suggests strong demand and a robust backlog tied to ongoing AI infrastructure expansion, profitability trends remain a key concern.
Wedbush highlighted that gross margins are expected to decline by roughly 300 basis points sequentially, which could substantially weigh on earnings.
As a result, the firm cut its fiscal 2026 earnings per share estimate to $2.16 from $2.87, and its fiscal 2027 forecast to $3.28 from $3.76, despite projecting nearly 70% year-over-year sales growth.
“While the sales opportunity remains fantastic, we have limited confidence in future leverage in the model,” Wedbush wrote, noting that management had previously suggested margin recovery that has yet to materialize.
“With the environment seemingly becoming more competitive and with little visibility into future margins, we wonder if even our expectations (SMCI regaining about half the margins they forecast losing) are realistic.”
Wedbush lowered its 12-month price target to $42 from $48, based on a price-to-earnings multiple of about 13x applied to 2027 estimates. Supermicro shares opened at about $44 on Wednesday.