Super Micro Computer, a manufacturer of artificial intelligence servers, faced challenges in the third quarter due to component shortages and uncertainties surrounding the profitability of its new server line. Despite a surge in its stock value this year, the company’s shares plummeted by 14% in after-hours trading.
Based in San Jose, California, Super Micro builds AI servers using chips from Nvidia, Advanced Micro Devices, and others. While it projected fourth-quarter revenue to exceed expectations due to sustained demand, analysts raised concerns during an earnings call about the costs associated with transitioning to new Nvidia chips requiring liquid cooling.
CEO Charles Liang emphasized the importance of Super Micro’s proprietary liquid cooling technology for gaining market share. He acknowledged the premium paid for securing supplies but assured that customers would only incur a minimal additional cost for the new servers.
Despite increased inventory costs, Chief Financial Officer David Weigand underscored the necessity of maintaining inventory levels for fourth-quarter shipments. He reiterated the company’s commitment to maintaining gross margins in the 14% to 17% range, despite concerns from some analysts about margin implications in the quarterly forecast.
Super Micro anticipates fourth-quarter revenue between $5.1 billion and $5.5 billion, exceeding analyst estimates. Liang noted that component shortages constrained the company’s ability to deliver even higher revenues.
The company revised its annual sales forecast upward to a range of $14.7 billion to $15.1 billion, compared to the previous projection of $14.3 billion to $14.7 billion.
In the first quarter, Super Micro reported an adjusted profit of $6.65 per share, surpassing analysts’ expectations of $5.78 per share.
