2024-05-06 23:31:15 ET
Summary
- Super Micro Computer reported decent earnings for Q3, but shares collapsed 16% after earnings due to profit taking.
- The company beat bottom line expectations but missed on revenues. Revenue grew 200% Y/Y due to strong demand for AI chips and servers.
- However, the gross margin profile remains weak, indicating challenges in pricing power and potential challenges for the company in FY 2024.
Super Micro Computer ( SMCI ) reported earnings for the third fiscal quarter last week that showed that demand for AI chips and servers remained hot, but the company still managed to disappoint investors, causing a 16% price slump after earnings. The price drop likely occurred on general profit taking as shares of Super Micro Computer have widely outperformed this year, including AI rivals such as NVIDIA ( NVDA ) and AMD ( AMD ). Super Micro Computer saw double-digit top line growth, but the company’s gross margins remained under pressure. The outlook for FY 2024 revenues was strong, however. I believe the risk profile has fundamentally improved on the drop, and I am changing my stock rating from sell to hold!...
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Super Micro Computer: Margins Remain A Concern (Rating Upgrade)