SAN JOSE, California, August 14, 2026, 12:11 PDT
Shares in Super Micro Computer NASDAQ:SMCI gained 1.5% to $39.76 on Friday afternoon. However, the company’s guidance for the first quarter indicates a tougher challenge ahead, with adjusted gross profit projected to decline by around 19% quarter-on-quarter, despite an anticipated revenue increase of about 35%. The U.S. cash market stayed open.
The calculation highlights the dilemma for investors following Tuesday’s earnings. Supermicro is projecting significantly higher AI-server sales, though its short-term product mix has slimmer margins. Profit may not rise solely on revenue gains.
The share price climbed roughly 13% on Wednesday. Following the results, over seven brokerages lifted their price targets. Friday’s modest advance indicates that the initial revaluation phase is likely over.
| Q4 fiscal 2026 metric | Q4 FY2026 | Q3 FY2026 | Q4 FY2025 |
|---|---|---|---|
| Net sales | $11.12 billion | $10.24 billion | $5.76 billion |
| GAAP gross margin | 17.5% | 9.9% | 9.5% |
| Net income | $1.18 billion | $483 million | $195 million |
| GAAP diluted EPS | $1.62 | $0.72 | $0.31 |
| Non-GAAP diluted EPS | $1.70 | — | $0.41 |
Sales in the fourth quarter were almost twice the level of the previous year. The GAAP gross margin reached 17.5%, an increase of 7.6 percentage points compared to March. Chief Executive Charles Liang reported that Supermicro “generated more than $60 billion in new orders” and began fiscal 2027 with a record backlog. Supermicro results
Some demand shifted into different quarters as customers did not have sufficient power, cooling, or networking infrastructure. Supermicro posted $11.12 billion in revenue, falling short of the $11.55 billion average analyst estimate referenced by Reuters. As a result, the margin outperformance accounted for the bulk of the earnings surprise.
| Near-term earnings bridge | Q4 FY2026 actual | Q1 FY2027 midpoint | Sequential change |
|---|---|---|---|
| Revenue | $11.12 billion | $15.00 billion | Up 34.9% |
| Adjusted gross margin | 17.6% | 10.6% | Down 7.0 percentage points |
| Implied adjusted gross profit | $1.95 billion | $1.59 billion | Down 18.5% |
The bridge is sharp. In the middle, an extra $3.88 billion in quarterly sales would be insufficient to balance out the seven-point margin reset. Analysts are concentrating on whether factors such as customer timing, pricing, and product mix will uphold the margin for the fourth quarter.
The conversion of earnings into cash poses another challenge. Net income for the fiscal year more than doubled, yet operating cash flow dropped to negative $6.81 billion. The primary cause was higher inventory and receivables.
| Fiscal-year cash-conversion measure | FY2026 | FY2025 | Change |
|---|---|---|---|
| Net income | $2.23 billion | $1.05 billion | +$1.18 billion |
| Operating cash flow | -$6.81 billion | $1.66 billion | -$8.47 billion |
| Inventory | $12.90 billion | $4.68 billion | +$8.22 billion |
| Accounts receivable | $6.13 billion | $2.20 billion | +$3.92 billion |
| Cash and equivalents | $7.52 billion | $5.17 billion | +$2.35 billion |
Funding bridged the shortfall. Supermicro raised $9.48 billion via financing activities in fiscal 2026, which included both common and mandatory-convertible equity. The number of diluted shares increased by 12.9% year-on-year in the June quarter.
Management projects fiscal 2027 sales between $65 billion and $72 billion. The midpoint, $68.5 billion, suggests a 75.4% increase compared to fiscal 2026. This figure exceeds the $52.5 billion Wall Street consensus previously noted by Reuters before the release.
| Analyst view | Number | Proportion of 14 total ratings |
|---|---|---|
| Buy | 3 | 21.4% |
| Hold | 9 | 64.3% |
| Sell | 2 | 14.3% |
| Mean 12-month target | $40.91 | 2.9% higher than $39.76 |
| Target spectrum | $33-$51 | -17.0% to +28.3% |
The consensus among analysts stays cautious. Out of 14 surveyed, nine recommend holding the stock. The mean price target indicates under 3% potential upside based on Friday’s close, with projections ranging from $33 to $51.
Adjusted gross profit and operating cash flow are the main metrics to watch in the next report. Cash could be freed up by a slower inventory build, even if margins remain compressed. If working-capital requirements continue rising, the sales outlook will rely increasingly on outside funding.
Risks: Supermicro notes that its reported orders may reflect non-binding commitments, which could face postponements or cancellations. The most recent financial results are unaudited and subject to revision. Ongoing export-control actions involving related parties introduce further legal uncertainty, but the company states it is not named as a defendant.
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