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Key Points
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Investors who thought Super Micro Computer was back on track received some surprising news last night.
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The company said lost sales in the most recent quarter were due to customers delaying purchasing decisions.
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The latest announcement seems to have hurt management's credibility with investors.
Super Micro Computer (NASDAQ: SMCI) has had a turbulent year. After facing accounting questions, replacing its auditor, and avoiding the de-listing of its shares, the maker of high-end, liquid-cooled artificial intelligence (AI) servers seemed to be back on track this year.
A business update provided by the company yesterday, however, says otherwise. Investors are dumping Supermicro shares today as a result. The stock crashed by as much as 20% Wednesday morning. As of 11:30 a.m. ET, shares remained below yesterday's close by about 16%, and more than 50% off recent highs.
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Supermicro cuts guidance again
After delays in required Securities and Exchange Commission (SEC) filings, Supermicro regained compliance in February and avoided the de-listing of its shares from the Nasdaq stock exchange. At the time, the company also lowered revenue guidance for its fiscal 2025 third quarter, ended March 31, and for the full year. Investors reacted positively, though, as Supermicro seemed to be back on track and could begin refocusing on its business.
Then the company dropped a bombshell last night. Management slashed third-quarter sales guidance from a midpoint of $5.5 billion to $4.55 billion. Net income estimates were also cut.
The company said it believes some sales were pushed back to Q4 by customers delaying purchase decisions, and that it reduced bottom-line guidance "primarily due to higher inventory reserves resulting from older generation products and expedite costs." The company plans to report on the quarter on May 6.
Investors aren't waiting for another turnaround
There are two potential explanations for the lowered guidance. Customers may indeed be pushing back data center investments for AI compute power amid the uncertain tariff environment. Customers may also be moving to competitor offerings from the likes of Dell Technologies and Hewlett Packard Enterprise. Either possibility is bad news for Supermicro.
Investors are selling shares in droves today either due to lost faith in management, concerns that Supermicro's business prospects are slipping, or a combination of both. Regardless, there isn't a good case to buy Supermicro shares after its most recent disappointing business update.