Super Micro Computer Stock Sinks Again on Guidance. Is It Time to Buy the Dip?

Geoffrey Seiler, The Motley Fool

Sat, May 10, 2025, 9:15 AM 5 min read

• Supermicro shares fell once again after the company issued weak guidance.

• It has struggled with margin pressure and forecasting revenue.

• While its stock looks cheap, it is in a low-margin business with no moat.

• 10 stocks we like better than Super Micro Computer ›

After seeing its shares tumble when the company pre-announced disappointing fiscal third-quarter results, Super Micro Computer (NASDAQ: SMCI) stock was once again falling after the company reported its full results and issued weak guidance.

It's been a crazy 2025 for the stock, which finds itself near breakeven on the year. However, it's also down nearly 50% since mid-February.

The stock initially posted a huge rally after Supermicro was able to file its annual reports, potentially ending a saga related to its accounting. A short-seller initially accused Supermicro of manipulating its accounting, and the company subsequently delaying its annual report and its auditor resigning only added fuel to the fire. The fact that the Securities and Exchange Commission (SEC) had fined the company a few years earlier over accounting issues also didn't help its image.

Even as the stock rallied, though, underlying issues have been popping up with Supermicro's operational results. This is not the first time the company has lowered its fiscal-year guidance. It's been a consistent theme. In November, it slashed its fiscal first-quarter revenue guidance to a range of $5.9 billion to $6 billion from earlier guidance of between $6 billion and $7 billion. In February, meanwhile, it also announced that its fiscal Q2 revenue would fall short of expectations.

In addition to its struggles forecasting revenue, Supermicro has also seen gross margin pressure. This began in its fiscal Q4 ending in June 2024, when its gross margin sank to 11.3% from 17% a year earlier. The company said that this was because it reduced prices in order to secure new design wins. The lower gross margins are, the more difficult it is to turn revenue into profits.

With its fiscal Q3 report and guidance, Supermicro's past issues show no signs of letting up.

For the quarter, its revenue rose 19% to $4.6 billion, but that was well short of its earlier guidance for sales to range between $5 billion and $6 billion. Meanwhile, its fiscal Q4 guidance calling for sales of $5.6 billion to $6.4 billion also fell well short of the $6.82 billion analyst consensus, as compiled by LSEG.

At the time of its pre-announcement, Supermicro said customers were delaying platform decisions, which would move sales into its fiscal Q4. On its conference call, the company expanded on this, noting that it was due to customers waiting to evaluate the difference between Nvidia's Hopper and Blackwell graphics processing units (GPUs).