Super Micro Computer, Inc. ( $SUPER MICRO COMPUTER INC(SMCI)$ ) recently “announced” its earnings report, but in reality, what it released was a preliminary estimate rather than an official filing. Given its history of reporting delays, this move raises serious concerns about whether SMCI is playing for time again. At the same time, the company attempted to bolster investor confidence by unveiling an ambitious vision for 2026 revenue, which, given current industry dynamics, appears increasingly unrealistic. Let’s analyze whether this narrative can sustain the recent rally—or if it’s just a mirage.
The "Earnings Report" That Wasn’t Really an Earnings Report
On February 12, 2025, SMCI provided preliminary financial results for its fiscal second quarter, projecting revenue between $5.6 billion and $5.7 billion, with adjusted earnings per share (EPS) in the range of $0.58 to $0.60. However, these figures fell short of prior guidance, leading to a downward revision of the company’s full-year revenue expectations from $26-$30 billion to $23.5-$25 billion.
What’s even more concerning is that SMCI still has not officially filed its earnings report with the SEC. The company has until February 25, 2025, to meet Nasdaq’s listing requirements, yet it continues to delay. Given its past behaviour and the ongoing Department of Justice and SEC investigations into its financial practices, it is highly suspicious that SMCI appears to be stalling once again. This lack of transparency should serve as a red flag for investors.
The 2026 Vision: A Lofty Dream or a Realistic Goal?
To offset the disappointment from the downward revision of 2025 revenue, SMCI’s CEO Charles Liang boldly projected a staggering $40 billion in revenue by 2026. On the surface, this bold forecast could be seen as an attempt to rally the stock price. While this claim might sound exciting at first glance, a closer look reveals several reasons to be sceptical:
1. Jensen Huang’s Relationship with SMCI: Favorable, but Not Exclusive
SMCI has benefited from being a key supplier of NVIDIA-powered AI servers, and NVIDIA CEO Jensen Huang has spoken positively about the company’s ability to deliver solutions quickly. However:
-
NVIDIA does not rely exclusively on SMCI—major players like Dell, HPE, and ODM manufacturers (Quanta, Wiwynn, Foxconn) are equally important in NVIDIA’s ecosystem.
-
NVIDIA itself is pushing more direct AI solutions (e.g., DGX systems), which could reduce reliance on SMCI’s customized servers.
If NVIDIA shifts its focus or prioritizes Tier 1 partners, SMCI could see its advantage erode quickly.
2. Blackwell’s Market Prospects: A Blessing or a Double-Edged Sword?
NVIDIA’s next-gen Blackwell GPU architecture, expected in late 2025, is a major inflection point for AI infrastructure. SMCI is betting on strong adoption, but:
-
High demand could lead to supply constraints, where NVIDIA prioritizes larger partners over SMCI.
-
Enterprises may delay purchases due to the high cost of upgrading from the current Hopper architecture.
If SMCI fails to secure a strong Blackwell supply or demand falls short of expectations, its ambitious growth target could crumble.
3. AI Investment Slowdown: A Major Threat to SMCI’s Growth
Despite the ongoing AI boom, investment in AI infrastructure is showing signs of cooling due to:
-
Over-investment in 2023-2024: Many companies have already built massive AI clusters and are now focused on optimizing efficiency rather than expanding hardware.
-
Macroeconomic headwinds: Higher interest rates and economic uncertainty could lead enterprises to scale back AI investments.
-
Shift towards cost efficiency: Instead of rushing into more GPU purchases, companies are focusing on improving AI model efficiency and reducing costs.
If AI capital expenditures slow, SMCI’s growth prospects could take a hit, making its 2026 target even more questionable.
4. Competitive Pressures: Can SMCI Maintain Its Edge?
While SMCI has an advantage in speed and flexibility, it faces intense competition from:
-
Dell & HPE: Larger enterprises with established relationships and integrated enterprise solutions.
-
Cloud Providers: Hyperscalers like Amazon, Google, and Microsoft are developing their own AI chips, reducing reliance on NVIDIA GPUs (and by extension, SMCI’s servers).
-
ODM Players: Companies like Quanta and Wiwynn provide cost-effective, large-scale AI servers for major cloud providers.
As competition increases, SMCI’s ability to differentiate itself and maintain pricing power will be severely tested.
Conclusion: Proceed with Caution
SMCI’s latest “earnings announcement” does little to inspire confidence. The company’s continued delay in officially filing its earnings, combined with its grandiose 2026 revenue projection, raises red flags. While SMCI remains an important player in the AI server market, its reliance on NVIDIA, potential AI investment slowdown, and increasing competition all pose significant risks to its lofty valuation.
So, can this earnings mirage support the rally in SMCI's stock price? From a sceptical perspective, it's hard to say. While the company's preliminary financial information and 2026 vision "pie" may seem impressive at first glance, they lack substance and transparency. Investors would do well to remain highly sceptical and vigilant, closely observing SMCI's subsequent behaviour and waiting for more concrete evidence of its financial health before making any investment decisions.
In conclusion, Super Micro's earnings mirage is a classic case of "buyers beware." While the company's vision for 2026 may seem enticing, it's essential to separate the wheat from the chaff and demand more transparency and accountability from SMCI. Only time will tell if this earnings announcement is a genuine attempt at reassurance or a cleverly crafted illusion.
Comments