Super Micro Computer Q3 Earnings Review: Uninvestable Might Be An Understatement

2025-05-07 15:11:27 ET

Summary

• Super Micro Computer, Inc.’s early-year rally has unraveled as expected, with weak March-quarter earnings and persistent execution issues undermining confidence in its $40B FY26 revenue target.
• Management’s shifting tone and slashed FY25 guidance raise doubts about the credibility of SMCI's long-term growth outlook, especially amid delayed Blackwell GPU deployments, rising competition, and other industrywide regulatory headwinds.
• Mounting inventory risks tied to the accelerated transition to next-generation Nvidia GB300 systems threaten further gross margin compression as well, which remains underappreciated.
• The combination of evolving industry dynamics, regulatory, macroeconomic, and unresolved accounting overhangs continues to weigh on sentiment, reinforcing SMCI stock’s depressed valuation as the likely new base case.

As we had predicted in our previous coverage on the stock, Super Micro Computer, Inc.’s ( SMCI ) early-year upsurge was poised to dissipate. Recall that the stock had more than doubled in the two weeks following its announcement of a $700 million convertible top-up and a $40 billion FY26 revenue guidance in early February. We had viewed both as short-lived distractions at the time, given that SMCI’s underlying accounting and operational challenges were bound to expose the stock’s early-year appreciation to weakness....

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