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Super Micro Computer (NASDAQ:SMCI) shares dropped over 4% in pre-market trading on Wednesday after the company cut its full-year revenue outlook, pointing to economic uncertainty and stiff competition in the server market.
The company now sees fiscal 2025 revenue coming in between $21.8 billion and $22.6 billion, down from its earlier forecast of $23.5 billion to $25 billion. That's well below Wall Street's $23.5 billion consensus and signals a tougher road ahead as macro pressures weigh on enterprise spending.
Fourth-quarter revenue is now expected to land between $5.6 billion and $6.4 billion, missing the $6.81 billion target analysts had in mind. Non-GAAP earnings per share (EPS) are also forecast to come in lower, at $0.40 to $0.50, short of the $0.60 consensus.
CEO Charles Liang highlighted ongoing trade challenges, including tariffs on critical components like semiconductors, as a major drag on growth. He noted that these pressures are making it harder for the company to predict customer demand, particularly with new AI server competition heating up.
CFO David Weigand added that gross margins are likely to shrink to about 10%, a steep drop from 14% in fiscal 2024 and 18% in 2023, as costs rise.
Management sidestepped questions on the company's previously bold $40 billion revenue target for 2026, underscoring the uncertain path ahead.
Is SMCI Stock a Buy Now?
Based on the one year price targets offered by 12 analysts, the average target price for Super Micro Computer Inc is $44.93 with a high estimate of $73.00 and a low estimate of $15.00. The average target implies a upside of +36.39% from the current price of $32.94.
Based on GuruFocus estimates, the estimated GF Value for Super Micro Computer Inc in one year is $60.03, suggesting a upside of +82.24% from the current price of $32.94. For deeper insights, visit the SMCI Forecast page.
This article first appeared on GuruFocus.