Super Micro Computer Inc (NASDAQ:SMCI) reported a sharp increase in fourth quarter profit as margins improved, while revenue came in slightly below analysts’ expectations.
The company's shares were up about 14% at about $36 on the report.
For the quarter ended June 30, Supermicro reported adjusted earnings per share of $1.70, compared with the $0.92 expected by analysts. Revenue rose to $11.1 billion from $10.2 billion in the prior quarter and $5.8 billion a year earlier, but fell short of the $11.6 billion analyst estimate.
Gross margin increased to 17.5% from 9.9% in the third quarter and 9.5% a year earlier. On a non-GAAP basis, gross margin was 17.6%.
Net income rose to $1.18 billion, or $1.62 per diluted share, from $483 million, or 72 cents per share, in the prior quarter. Non-GAAP net income attributable to common stockholders was $1.70 per diluted share, compared with 41 cents a year earlier.
Supermicro said it generated more than $60 billion in new orders during fiscal 2026 and entered fiscal 2027 with record backlog. The company also said it added several hundred enterprise and other customers over the past year.
“Our Total AI/IT Solutions strategy continues to deliver strong results, we added several hundred enterprise and other customers in the past year, generated more than $60 billion in new orders, and booked record backlog entering fiscal 2027,” CEO Charles Liang said. “As demand accelerates, we are improving profitability through a richer enterprise customer mix and broader adoption of our optimized Data Center Building Block Solutions® (DCBBS) architecture.”
For the full fiscal year, revenue increased to $39.1 billion from $22 billion a year earlier. Gross margin was 10.8%, compared with 11.1% in fiscal 2025, while net income rose to $2.2 billion, or $3.26 per diluted share, from $1 billion, or $1.68 per diluted share.
Non-GAAP net income attributable to common stockholders was $2.5 billion, or $3.63 per diluted share, compared with $1.3 billion, or $2.06 per diluted share, in the prior fiscal year.
Supermicro ended the fiscal year with $7.5 billion in cash and cash equivalents, while total bank debt and convertible notes stood at $8.7 billion.
For the first quarter of fiscal 2027, the company expects revenue of $14.5 billion to $15.5 billion, along with GAAP diluted earnings per share of 89 cents to 98 cents and non-GAAP diluted earnings per share of $1.01 to $1.10.
For the full fiscal year, Supermicro expects revenue of $65 billion to $72 billion.
Wedbush analysts viewed Supermicro’s fourth-quarter results and fiscal 2027 outlook as reasonable, while maintaining a Neutral rating and raising their price target to $40 from $36.
The analysts highlighted the company’s 17.6% non-GAAP gross margin, which was more than double management’s prior guidance of 8.2% to 8.4%. The stronger margin drove adjusted earnings per share of $1.70, compared with guidance of 65 cents to 79 cents, despite revenue of $11.1 billion coming in near the low end of the company’s guidance range.
Wedbush wrote that management attributed about 75% of the gross-margin upside to customer and product mix, including contracts that were deferred from the fourth quarter into the first quarter of fiscal 2027. Enterprise and channel customers accounted for 50% of revenue, up from 28%, while AI revenue declined to about 60% from more than 80% as several large AI deals were deferred.
The remaining 25% of the margin improvement came from lower tariffs and lower inventory reserves, which management characterized as nonrecurring, the analysts noted.
Looking ahead, Wedbush wrote that the first-quarter guidance indicates much of the margin upside will dissipate, although this is offset by stronger sales expectations. Supermicro's revenue forecast of $14.5 billion to $15.5 billion compares with consensus of about $11.7 billion, while its fiscal 2027 revenue forecast of $65 billion to $72 billion compares with consensus of about $52.5 billion.
The analysts said the full-year outlook appeared plausible, citing the more than $60 billion in new orders booked in the fourth quarter, about 70% of which was characterized as pure AI.
Wedbush also highlighted Supermicro’s projected first-quarter gross margin of 10.4% to 10.8%, above the roughly 8% level reflected in its model and the Street’s expectations.
“Net, while we remain NEUTRAL for now ... we also see reasons to potentially become more constructive moving forward,” the analysts wrote, pointing to what they view as reasonable growth expectations, an achievable path for gross margins to moderate toward about 10%, and a valuation that has moderated toward or potentially below levels they consider more typical for server vendors historically.
Wedbush raised its estimates and price target to $40 from $36 while maintaining its 'Neutral' rating. The analysts also described the outlook as a positive signal for Dell and HPE, saying Supermicro’s order book and fiscal 2027 outlook reinforce a demand backdrop that could benefit those OEM competitors.
For server component and hardware suppliers, Wedbush highlighted Supermicro’s more than $60 billion in new orders and inventory build to $12.9 billion as indicators of continued demand for CPUs, GPUs, memory and other server components.