Super Micro trims Q3 forecasts as customer delays and inventory pressure margins

Super Micro shares dropped 16% after trimming revenue guidance. (Photo: Shutterstock)

Super Micro Computer (trading as Supermicro) has revised its revenue and profit expectations for the third quarter of fiscal year 2025, attributing the downgrade to delays in customer platform decisions and inventory challenges tied to older generation products. The Nasdaq-listed server maker now expects net sales between $4.5bn and $4.6bn, down from earlier guidance of $5bn to $6bn.

The company also reduced its estimated GAAP diluted earnings per share to a range of $0.16 to $0.17 and non-GAAP diluted EPS to between $0.29 and $0.31. This represents a substantial drop from the previously forecasted ranges of $0.36 to $0.53 for GAAP EPS and $0.46 to $0.62 for non-GAAP EPS. Super Micro cited a 220-basis-point sequential decline in gross margin, attributing it to elevated inventory reserves and expedited shipping costs to support faster delivery of next-generation products.

Tech sector shares fall as AI demand outlook weakens

Super Micro’s announcement contributed to broader declines in the semiconductor and server equipment sector. Its shares fell 16% in extended trading following the update. The market reaction extended to other technology firms, with Nvidia down nearly 2% and AMD slipping 1%. Analysts interpreted the revised guidance as a sign of reduced momentum in AI-related hardware spending, reported Reuters.

The downward revision from Super Micro comes amid broader concerns about a potential pullback in capital expenditure across the AI infrastructure market. Several Wall Street analysts have noted that although long-term investments in AI remain on track at major firms such as Amazon and Alphabet, there has been a near-term re-evaluation of spending priorities.

Industry observers have linked some of this hesitation to external policy factors, including the introduction of new tariffs by the US administration under President Donald Trump. The trade measures, which target technology equipment imports, have created additional uncertainty around pricing and supply chain timelines.

According to Super Micro’s management, the weaker margins in Q3 stemmed primarily from excess stock tied to earlier product lines, compounded by accelerated logistics to meet market timelines for new solutions.

Analysts also raised the possibility that some enterprise customers may have shifted business to competitors such as Dell Technologies and Hewlett-Packard Enterprise. Following Super Micro’s announcement, Dell’s stock declined 4.6%, while Hewlett-Packard Enterprise fell more than 1.5%. Blake Anderson from Carson Group suggested that internal turbulence at Super Micro may have pushed certain clients to place orders with rival firms.

This update follows recent scrutiny over Super Micro’s accounting practices, which led to a potential delisting warning and raised questions about the company’s governance and transparency. Although Super Micro did not reference these issues in its latest update, investor sentiment remains cautious amid the ongoing financial review.

The company reiterated that the latest numbers are based on preliminary, unaudited results and remain subject to revision upon the finalisation of its third-quarter financial statements.

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