Super Micro Computer, Inc. (NASDAQ:SMCI) experienced a 32 percent increase in its share price last week, closing at $47.91 last Friday, up from $36.28 the previous week, driven by a positive long-term business outlook and revenue expectations.
Super Micro shares rise 32% amid positive outlook
For the second quarter of fiscal year 2025, Super Micro projects revenues between $5.6 billion and $5.7 billion, reflecting a year-on-year increase of 54 percent. The company’s diluted net income per share is estimated to be between 50 cents and 52 cents, remaining flat compared to the same period last year.
Looking ahead, Super Micro anticipates revenues of $40 billion for fiscal year 2026, exceeding analyst consensus by $10 billion. This growth is expected to be fueled by the integration of DLC technology, projected to be adopted by around 30 percent of new data centers within the next year.
However, the stock faced significant volatility since August 2023 when it announced a delay in filing its 10-K report following accusations of accounting issues from short-seller Hindenburg Research. This was exacerbated in subsequent months by reports of a Justice Department investigation and the resignation of its auditor, Ernst & Young. In November, Super Micro received a delisting notice from Nasdaq, which the company successfully extended, asserting that it did not expect to restate any financial results once the 10-K was filed.
On February 11, 2025, the company announced during its fiscal second-quarter earnings report that it intends to file its 10-K by February 25. This announcement, along with an increasing sense of investor confidence, contributed to a 25 percent rise in the stock from February 5 to February 12.
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In its second-quarter earnings report, which was the third consecutive presentation of unaudited preliminary financials, Super Micro confirmed that it would not restate any previously issued financial statements. However, adjustments were made to its fiscal 2024 fourth-quarter earnings report, which included an increase of approximately $46 million in net sales and an increase of $96 million in cost of sales, partly due to an increase in inventory reserves of $45 million. The company also projected an increase in operating expenses of about $5 million, leading to a reduction in GAAP and non-GAAP earnings per share by $0.09, thereby lowering adjusted earnings per share from $0.63 to $0.54.
The preliminary second-quarter earnings report indicated overall growth, with revenues at $5.6 billion to $5.7 billion, marking a 54 percent increase at the midpoint, but still falling short of the consensus of $5.94 billion. The company noted a decline in gross margin, which fell to 11.8% to 11.9%, down from 15.4% a year prior. Adjusted earnings per share between $0.58 and $0.60 reflected a 5 percent increase year-on-year but did not meet the estimate of $0.75.
Looking forward, Super Micro revised its full-year revenue guidance from a range of $26 billion to $30 billion down to $23.5 billion to $25 billion. The company disclosed that it received subpoenas from the DOJ and SEC late last year and asserted cooperation with the document requests regarding the concerns raised after the short-seller report.
Investors are advised to monitor the situation closely, particularly regarding the February 25 reporting date, which could significantly influence the stock’s trajectory and the company’s financial accountability.
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