ewsba.se
Super Micro Computer (SMCI) beat EPS by 34.51% at $0.84 but missed revenue expectations at $10.24B, yet raised full-year guidance to $38.9B-$40.4B driven by AI liquid-cooled racks and DCBBS datacenter platforms.
Gross margin surged to 9.9% from 6.3% sequentially and operating income jumped 326% year-over-year, though the balance sheet burned $6.6B in cash from operations in Q3 while bank debt and convertibles reached $8.8B amid an ongoing export-control review.
The analyst who called NVIDIA in 2010 just named his top 10 stocks and Super Micro Computer wasn't one of them. Get them here FREE.
Super Micro Computer (NASDAQ:SMCI) reported Q3 FY2026 results after the close on May 5, 2026, beating on earnings but missing badly on revenue. The market focused on the margin snap-back and a raised full-year outlook anyway. Shares are up 15.34% in midday trading to $32.10, recovering from the $27.83 close ahead of the earnings report. I thought the guide was the real headline.
Gross margin was the standout. GAAP gross margin climbed to 9.9% from 6.3% in Q2, with non-GAAP at 10.1%. That flowed straight to the bottom line. Operating income jumped 326.4% year over year and net income hit $483 million versus $109 million a year ago.
Forward guidance was the bigger lift. Supermicro raised the FY2026 revenue range to $38.9 billion to $40.4 billion from a prior $36 billion target, and called for Q4 revenue of $11.0 billion to $12.5 billion with non-GAAP EPS of $0.65 to $0.79. Liquid-cooled AI rack systems and the DCBBS datacenter platform are doing the heavy lifting.
The balance sheet is where the story gets uncomfortable. Supermicro burned $6.6 billion in cash from operations in Q3 while total liabilities expanded to $15.88 billion (+264.22% YoY) and bank debt plus convertibles hit $8.8 billion. Cash on hand fell to $1.29 billion, down 49.12% YoY.
Layered on top: results are preliminary and unaudited while an independent Board review of export-control matters continues. The company is cooperating with authorities and is not implicated at this time, but the overhang is real until the review closes.
Non-GAAP EPS: $0.84 (vs. $0.6245 consensus); 34.51% beat
Revenue: $10.24 billion (vs. $12.45 billion consensus); up 122.68% YoY
GAAP Gross Margin: 9.9% (from 6.3% sequentially)
Operating Income: $625.87 million, up 326.4% YoY
Net Income: $483 million, up 344.38% YoY
You should look at gross margin. Mix shifting toward DCBBS and rack-scale liquid-cooled systems is what made the EPS beat possible despite the top-line shortfall.
CEO Charles Liang said, "Supermicro's transformation into a total datacenter infrastructure provider is accelerating. Our margin recovery and the rapid growth of our DCBBS business demonstrate that our business remains robust." He pointed to new US manufacturing facilities in Silicon Valley as the bridge to meeting AI demand. The tone was confident, and CEO sentiment was scored positive.
Two things worth tracking: whether Q4 revenue lands in the upper half of the $11.0B to $12.5B guide, and whether cash from operations turns. Analyst consensus sits at $33.20, just above today's price, with the rating split skewing cautious at 5 Buys, 9 Holds, and 4 Sells. The export-control review is the wildcard.
This analyst's 2025 picks are up 106% on average. He just named his top 10 stocks to buy in 2026. Get them here FREE.