Financial Report Preview | Revenue Fears "Miss the Mark," but Gross Margin "Skyrocket" Super Micro Computer, Inc. (SMCI.US) Q4 financial report will assess the "quality" of the AI computing power chain's market conditions.

AI server manufacturer Super Micro Computer, Inc. (SMCI.US) will release its fourth-quarter financial report for fiscal year 2026 after U.S. stock market hours on August 11 (Tuesday). This report will not only influence the short-term stock price direction of Super Micro Computer, Inc. but also serve as an important indicator for the market to gauge whether the AI computing power supply chain's prosperity can be sustained. The preliminary Q4 results disclosed by Super Micro Computer, Inc. at the end of July ignited market sentiment: new orders exceeded $60 billion, backlog orders reached a historical high, and the gross margin guidance nearly doubled, driving its stock price up by 18%. However, the company acknowledged that Q4 revenue may fall at the lower end of its guidance range. This "imperfect" preliminary performance adds intrigue to the upcoming official quarterly report. Q4 Earnings Preview: Revenue Likely to Miss Target vs. Gross Margin Skyrocketing The preliminary results released by Super Micro Computer, Inc. at the end of July indicated that the gross margin for the quarter ending June 30 is expected to be between 15% and 17%, significantly higher than the previous guidance of 8.2% to 8.4%, primarily due to favorable changes in the customer structure and product mix; Q4 revenue is expected to fall at the lower end of the previously provided guidance range of $11 billion to $12.5 billion (with a median of $11.75 billion). Given that new orders during the quarter exceed $60 billion, backlog orders have reached a historic high. Although the company has indicated that revenue will likely fall at the lower end of its guidance, market expectations remain relatively optimistic. Currently, analysts are generally forecasting Super Micro Computer, Inc.'s Q4 revenue to be $11.56 billion, representing a year-on-year increase of 101%; earnings per share are expected to be $0.96, up 134% year-on-year. In the past three months, analysts have raised their revenue expectations for Super Micro Computer, Inc. 11 times, while lowering them 4 times. Notably, the company's Q3 revenue fell short of market expectations. Additionally, in the past five quarters of financial reports, revenue did not meet expectations on four occasions. In contrast, over the past three months, analysts have raised earnings per share expectations 16 times, with no downward adjustments, indicating concerns about the company's profit margins and profitability have significantly diminished. It is worth noting that the company only predicted earnings per share growth of 76% in its Q3 report and hinted at a decrease in profit margins. Currently, analysts expect an improvement in profit margins, aligning with the company's preliminary Q4 results. Analysts' In-Depth Analysis: Why Did Gross Margin Skyrocket? Industry Prosperity Supported by Cross-Validation Revenue falling at the lower end and gross margin nearly doublingthis seemingly contradictory data combination actually points to the same logic: the pattern of AI computing power being in short supply is reshaping the profit distribution of the industry chain. Wedbush analyst Matt Bryson remarked after the preliminary results were released that he had not previously anticipated such a significant increase in gross margin. He outlined three core drivers: First, supply-demand imbalance. Between June and July, AI motherboards (NVIDIA Corporation Grace, Blackwell, Hopper series), computing power hardware, memory, and other products remained in short supply, and the demand for high-profit AI server shipments could not be met. Second, pricing advantage. The tight supply of hardware has allowed Super Micro Computer, Inc. to take the initiative in pricing during the complete machine phase, while the company guides customers to purchase high-value models equipped with more self-developed supporting solutions, optimizing the profit structure. Third, structural optimization. The revenue falling at the low end of guidance is partially due to some major customers' data center construction projects being postponed, which indirectly increased the sales proportion of high-margin products. Bryson further pointed out that if the supply shortage caused by component shortages continues, Super Micro Computer, Inc.'s gross margin and earnings per share for the third quarter of the 2026 calendar year and subsequent quarters are likely to be significantly higher than previously expected. More importantly, the positive signals are not limited to Super Micro Computer, Inc. Bryson emphasized that the shortage of server components is beneficial to the broader supply chain (such as CPUs, GPUs, memory, etc.), and Dell Technologies, Inc. Class C (DELL.US), Hewlett Packard Enterprise Co. (HPE.US), and NVIDIA Corporation (NVDA.US) are also expected to benefit. Seeking Alpha contributor Bay Area Ideas highlighted that the profitability far exceeds previous expectations, indicating that Super Micro Computer, Inc. has recently made significant progress in differentiation. For example, the company's collaboration with Arm (ARM.US) seems to be bearing fruit. Super Micro Computer, Inc. previously stated that after deploying Arm AGI CPU on its solution platform, the performance per rack can exceed traditional architectures by more than double. According to Arm's estimates, this could help enterprises save up to $10 billion in capital expenditures per gigawatt of artificial intelligence data center capacity. Bay Area Ideas noted that this performance advantage helps attract server demand and supports gross margins. At this stage, infrastructure deployers are seeking high-performance and high-efficiency solutions, so Super Micro Computer, Inc. may be gaining stronger pricing power than ever before. Valuation Dropped to a Multi-Year Low, Multiple Risks on the Horizon: Is Super Micro Computer, Inc. a Golden Pit or a Value Trap? So far this year, Super Micro Computer, Inc.'s stock price has risen by 6%, underperforming the broader market. In terms of valuation, Super Micro Computer, Inc.'s forward price-to-earnings ratio is only 9.3 times, close to multi-year lows and significantly below the overall valuation level of the IT sector. For an AI server manufacturer with soaring gross margins and holding $60 billion in new orders, is this discount excessive? Super Micro Computer, Inc.'s valuation approaches multi-year lows. Such a low valuation raises the question of whether it is an opportunity that has been mispriced or a trap where risks are not fully priced in. The following dimensions are worth examining: Compliance risks. Amidst the U.S. government's strengthening of advanced chip export controls, Super Micro Computer, Inc. faces severe compliance challenges. Given that Super Micro Computer, Inc.'s products are equipped with NVIDIA Corporation chips, its business is deeply constrained by the U.S. export control framework. Equity dilution risks. In June, the company issued approximately 45.45 million shares of common stock at a price of $27.50 per share for financing. Following the preliminary results release at the end of July, Mizuho analyst Vijay Rakesh pointed out that considering the new orders exceeding $60 billion while the company has only about $1.3 billion in cash, Super Micro Computer, Inc. may face further capital raising needs in the short term. If this situation occurs, existing shareholders will face new dilution pressure. Duplicate ordering risks. Wedbush analysts have cautioned that, in the context of component supply shortages, the entire AI server industry may experience widespread duplicate ordering. Customers may oversubscribe to secure scarce production capacity, and once supply bottlenecks ease or demand expectations are revised downwards, the "water" within backlog orders may be exposed, creating a negative impact on the upstream supply chain. Intensifying industry competition. Traditional server manufacturers like Dell Technologies, Inc. Class C and Hewlett Packard Enterprise Co. are ramping up their AI server production capacity, and whether Super Micro Computer, Inc.'s long-term gross margin can continue to improve remains to be observed. Tipranks data shows that Wall Street analysts have mixed views on Super Micro Computer, Inc., with 3 analysts giving a Buy rating, 8 a Hold rating, and 1 a Sell rating, resulting in a consensus rating of Hold and an average target price of $38.40, which is 23% higher than the current level.