AI computing power chain is in high prosperity and validated! Wedbush: Super Micro Computer, Inc. (SMCI.US) gross profit margin "off the charts" is good news for NVIDIA Corporation and Dell Technologies, Inc. Class C.

Wedbush released a report stating that Super Micro Computer, Inc. (SMCI.US) significantly exceeded expectations in gross profit margin for the fourth quarter, which is also positive for Dell Technologies, Inc. Class C (DELL.US), Hewlett Packard Enterprise Co. (HPE.US), and NVIDIA Corporation (NVDA.US). Wedbush maintains a "neutral" rating for Super Micro Computer, Inc. with a target price of $34. Before the market opened on Wednesday, Super Micro Computer, Inc. stock soared by around 16%. The company's preliminary performance showed that the gross profit margin for the quarter ending on June 30 is estimated to be between 15%-17%, far exceeding the previous guidance of 8.2%-8.4%, mainly due to favorable changes in customer structure and product portfolio. The AI server manufacturer also revealed that revenue for the fourth quarter will fall at the lower end of the previously guided range of $11 billion to $12.5 billion (with the midpoint being $11.75 billion), compared to the market expectation of $11.68 billion. The company reported a backlog of orders exceeding $600 billion, reaching a historical high. Wedbush analyst Matt Bryson stated, "We believe that the current component shortage has resulted in insufficient supply of complete machines, allowing manufacturers to have pricing power. If this trend continues, Super Micro Computer, Inc. is expected to see significantly higher gross profit margin and earnings per share in the third quarter of 2026 and subsequent quarters than previously expected. Although we are somewhat concerned about the possibility of more widespread duplicate ordering in the entire industry due to tight component supply, the new order data for Super Micro Computer, Inc. is undoubtedly positive news." The analyst admitted to not anticipating such a significant increase in gross profit margin for Super Micro Computer, Inc. and identified the core reasons for the performance exceeding expectations: Firstly, from June to July, the market continuously reported high demand and low supply for AI boards (NVIDIA Corporation Grace Blackwell, Blackwell, Hopper series), computing hardware, memory, and other products, causing high-profit AI server shipments to not meet the strong demand. Secondly, the hardware shortage gave Super Micro Computer, Inc. a pricing advantage, and the company guided customers to purchase high value models with more in-house solutions, optimizing the profit structure. Thirdly, the lower than expected revenue range may be due to the delay of some large customers' data center construction projects, indirectly increasing the sales proportion of the company's high-margin products. In addition, there was a significant increase in the backlog of orders for Super Micro Computer, Inc., which was consistent with feedback from institutions: a large number of data center orders will drive a significant increase in general hardware procurement demand in the industry next year. Bryson pointed out that if the logical reasoning for Super Micro Computer, Inc. exceeding expectations is valid, Dell Technologies, Inc. Class C, Hewlett Packard Enterprise Co., Gigabyte, and other server manufacturers will benefit from the same industry supply-demand situation. The analyst added that the shortage of server components is positive for the broader supply chain, such as CPU, GPU, memory, etc. Bryson said, "In the current situation of limited supply and increasing future orders, NVIDIA Corporation is undoubtedly the biggest beneficiary, for two reasons: currently and in the future, most server ODMs (including Super Micro Computer, Inc.) producing AI servers use NVIDIA Corporation GPU; among all hardware suppliers, NVIDIA Corporation has the strongest supply chain security."