Super Micro Computer Inc (NASDAQ:SMCI) shares surged about 18% following its fiscal third-quarter 2026 results, as strong earnings and margin performance outweighed a revenue miss.
For the quarter ended March 31, 2026, Supermicro reported net sales of $10.24 billion, well below estimates of $12.33 billion.
Revenue also declined from $12.7 billion in the prior quarter, though it more than doubled year over year from $4.6 billion.
Despite the top-line miss, adjusted earnings per share came in at $0.84, beating consensus estimates of $0.64.
Net income rose to $483 million, up from $401 million in the prior quarter.
Gross margin was a key positive in the period, improving to 9.9% from 6.3% in the previous quarter, with non-GAAP gross margin at 10.1%. The improvement helped drive the earnings beat even as revenue came in below expectations.
The company also reported cash flow used in operations of $6.6 billion and capital expenditures of $97 million.
Supermicro ended the quarter with $1.3 billion in cash and cash equivalents, alongside $8.8 billion in bank debt and convertible notes.
Charles Liang, Supermicro CEO, said the company’s transition toward a broader data center infrastructure provider is accelerating.
“Our margin recovery and the rapid growth of our DCBBS business demonstrate that our business remains robust,” Liang said.
“With the addition of our new US manufacturing facilities in Silicon Valley, we are exceptionally well-positioned to meet the massive demand for various AI and enterprise verticals.”
Looking ahead, Supermicro guided fourth-quarter revenue between $11 billion and $12.5 billion, with adjusted EPS of $0.65 to $0.79.
For fiscal 2026, it expects full-year revenue of $38.9 billion to $40.4 billion.
Wedbush analysts highlighted the quarter as a notable shift in Supermicro’s recent performance pattern, with gross margins coming in ahead of expectations after several quarters in which they had lagged investor focus.
“Gross margins have been a bugaboo for SMCI the last few quarters even as sales, and sales guidance, have largely tracked to or ahead of expectations,” Wedbush wrote. “This quarter saw that paradigm reverse with SMCI GMs beating handily, coming in at ~10.1%, up 370 bps sequentially.”
The firm noted that the stronger-than-expected margins helped offset the revenue shortfall, which it attributed in part to supply constraints and timing shifts in data center deployments, rather than outright demand loss.
While Supermicro guided for gross margins to ease to 8.2%–8.4% in the current quarter, Wedbush said this still came in ahead of its prior forecast and suggested there may be near-term support for margins.
The analysts pointed to a mix shift between AI and traditional server demand, as well as increased orders from smaller “neocloud” customers with less pricing leverage, as potential stabilizing factors for profitability.
Meanwhile, Wedbush maintained a more cautious stance on longer-term gross margin trends, particularly as AI server configurations become more reliant on third-party components.
The firm also flagged ongoing concerns around shipments to China and corporate controls, noting uncertainty around regulatory scrutiny. Wedbush said it remains “on the sidelines” pending greater clarity on governance-related issues.
On broader industry impact, Wedbush viewed the results as a positive signal for AI and server demand more generally, also characterizing them as constructive for competitors such as Dell and for the wider server hardware ecosystem.