SMCI Results: Super Micro Computer Tanks on Huge Guidance Miss

Shares of Super Micro Computer (SMCI) plunged in after-hours trading after the computer hardware maker reported mixed preliminary results for the first quarter of fiscal 2025 that included a sharp miss of forecasts. Earnings per share are expected to be between $0.75 and $0.76, beating analysts' consensus estimate of $0.73 per share. On the other hand, sales are expected to be between $5.9 and $6 billion. This missed analysts' expectations of $6.44 billion.

However, the numbers are not the most important thing investors are focusing on today. This is because confidence in management has fallen significantly since SMCI's auditor resigned last week after saying he could no longer rely on management's financial representations, meaning those figures are unaudited . Instead, they look for information about the company's accounting practices.

In this regard, the special committee tasked with investigating Super Micro's accounting practices said it found no evidence of fraud or misconduct by managers and board members. It also noted that it recommends steps to strengthen internal governance, but did not provide details. However, the committee expects to “present the full report on the completed work this week or next”. Separately, SMCI said it intends to ensure it remains compliant with Nasdaq (NDAQ) listing requirements.

SMCI's guidance for the second quarter of 2025

Looking forward, management has provided the following guidance for the second quarter of 2025:

• Second-quarter revenue is in the range of $5.5 billion to $6.1 billion, versus estimates of $6.84 billion
• Second quarter adjusted earnings per share of $0.56 to $0.65 compared to expectations of $0.81

As you can see, the guidance was significantly worse than expected, which likely contributed to the stock's after-hours move.

Investor sentiment on SMCI stock

Surprisingly, sentiment among TipRanks investors is currently positive, even though SMCI's share price has struggled. Of the 764,637 portfolios tracked by TipRanks, 4% hold SMCI stocks. This is actually an increase from the previous earnings report, when 2.9% of portfolios held SMCI shares.

Additionally, the average portfolio weight assigned to SMCI among those holding a position is 5.35%. This suggests that the company's investors are confident about the future, especially since 3.3% of stockholders have increased their positions in the last 30 days.

However, it is worth noting that the value has actually fallen by 0.9% over the past week, most likely due to the auditor's resignation. Still, it appears that investors may view the company's recent balance sheet issues as a temporary headwind overall.

Is SMCI stock a good buy?

Overall, analysts have assigned a consensus rating of “Hold” to SMCI stock based on three buys, 10 holds, and zero sells over the past three months, as shown in the chart below. After declining 9% year-to-date, SMCI's average price target of $61.76 per share implies an upside potential of 138.64%. However, it's important to note that estimates are likely to change following today's earnings report.

See more SMCI analyst ratings