Financial Report Preview | Super Micro Computer, Inc. (SMCI.US) will announce its earnings tomorrow. Revenue expectations are under pressure, prompting caution. Can substantial orders effectively hedge against this?

Artificial intelligence (AI) server manufacturer Super Micro Computer, Inc. (SMCI.US) plans to release its first quarter fiscal 2026 earnings report after the market closes on November 4th (Tuesday). Earlier, the company announced its preliminary first quarter revenue expectation of $5 billion, lower than its previous guidance and below Wall Street expectations, leading to pressure on Super Micro Computer's stock price. Despite this, due to investors' confidence in the company's long-term growth prospects amidst the AI boom, Super Micro Computer's stock price has still accumulated a 70.5% increase this year. However, Wall Street remains cautious with the stock, forecasting a 49.3% year-on-year decline in earnings per share (EPS) for the company's first quarter fiscal 2026, to be $0.38. On October 23rd, the company announced preliminary revenue data for the first quarter that was significantly lower than market expectations, causing the stock price to drop by 8%. The company stated that first quarter fiscal 2026 revenue is expected to be approximately $5 billion, falling short of the market's consensus expectation of $6.48 billion. The company explained that some already-received orders had revenue recognition deferred to the second quarter due to upgrades. However, the company emphasized that newly added design orders totaling over $12 billion are expected to be delivered starting from the second quarter of fiscal 2026. The market's general expectation for revenue for this quarter is $5.83 billion, a 1.9% decrease from the same period last year. Investors will be focusing on management's interpretation of the company's business development momentum and new order situation. Analyst ratings are currently divided Following Super Micro Computer's announcement of preliminary first quarter revenue expectations, Rosenblatt Securities analyst Kevin Cassidy raised his price target from $50 to $60 and reiterated a "buy" rating. The analyst stated that while the negative revenue guidance for the first quarter fiscal 2026 was disappointing, the company also announced a reserve of over $12 billion in new design orders (with delivery demand concentrated in the second quarter of fiscal 2026), somewhat offsetting this negative impact. Cassidy adjusted his revenue forecast for the first quarter of fiscal 2026 for Super Micro Computer from $1.5 billion to the following quarters of the fiscal year, and raised the full-year revenue forecast for fiscal 2026, though this expectation is still slightly below the company management's target of $33 billion. Cassidy believes that the AI data center market is evolving rapidly, with customers seeking cutting-edge product designs. Despite short-term revenue fluctuations, Super Micro Computer is "sufficiently flexible" to respond to customer demands. He said, "The end result will be increased customer satisfaction and locking in long-term growth." Meanwhile, Jefferies Securities analyst Vijay Rakesh reiterated a "neutral" rating for Super Micro Computer with a target price of $50. The analyst noted that Super Micro Computer mentioned obtaining $12 billion in design orders in the September quarter, believing that these orders are from customers hoping to receive deliveries in the December quarter. Rakesh stated that due to strong demand for NVIDIA Corporation's (NVDA.US) GB300, B300, and RTX Pro chips and the shipment of AMD's (AMD.US) MI355X servers, part of Super Micro Computer's revenue for the first quarter fiscal 2026 will be postponed to the second quarter of the fiscal year. Despite receiving substantial design orders, Rakesh remains cautious about the stock. He believes that Dell Technologies, Inc. Class C technology (DELL.US) is gaining share in the second-tier cloud service provider (CSP) and enterprise AI server market Oracle Corporation (ORCL.US) Oracle Corporation Cloud Infrastructure (OCI), xAI, and CoreWeave (CRWV.US) are all significantly increasing their purchases of Dell Technologies, Inc. Class C servers; in addition, Dell Technologies, Inc. Class C has advantages in financing support and service and support capabilities that are ten times that of its peers. TipRanks AI analysts give a "neutral" rating for Super Micro Computer stock with a target price of $56, implying about 8% upside potential for the stock. The AI analyst mentioned in the rating that Super Micro Computer's positive factors include strong revenue growth and cash flow improvements, but these advantages are offset by narrowing profit margins, rising leverage, and valuation concerns. Options traders expect a significant volatility in Super Micro Computer's stock price after the earnings report. Current data shows that options traders expect a 12.03% bidirectional (up or down) volatility in Super Micro Computer's stock price after the first quarter fiscal 2026 earnings report. Currently, Wall Street's consensus rating for Super Micro Computer, Inc. stock is "neutral," based on 8 "neutral," 4 "buy," and 3 "sell" ratings. The average target price for Super Micro Computer is $44.15, indicating a potential downside risk of about 15% compared to the current stock price.