Key Takeaways
- Super Micro Computer’s September quarter revenue hit $19.9 billion, nearly four times a year earlier, and it raised its fiscal 2027 outlook to $72 billion to $82 billion.
- One data center customer bought 44% of the quarter’s sales, and the CFO called that concentration a consequence of how large AI buildouts have become.
- Gross margin fell to 12.7% from 17.5%, and operations used $434 million of cash, so the record quarter didn’t turn into cash.
- The December quarter report, expected in early February, needs revenue of at least $19.5 billion, gross margin near 12% and positive operating cash flow.
Super Micro Computer (SMCI) just posted a quarter that would have looked like a typo a year ago. Revenue for the September quarter hit $19.9 billion, nearly four times the $5.0 billion it reported a year earlier.
The stock didn’t hold the celebration for long. Shares slid with other AI hardware names after the November 3 midterms, and Dell Technologies (DELL) fell alongside it. Dell booked $16.4 billion of AI server revenue last quarter.
So investors are looking past the headline. Two other numbers have their attention: a gross margin that dropped back to 12.7%, and a single customer that bought 44% of everything Super Micro sold.
A quarter four times bigger
Super Micro had already flagged the beat. On October 20 it said revenue would land between $18.5 billion and $19.5 billion, against analysts’ average estimate of $15 billion. The final number cleared even that preliminary range.
The key figures from the report:
- Revenue rose 79% from the June quarter’s $11.1 billion.
- Net income reached $1.59 billion, up from $168 million a year ago.
- Non-GAAP EPS came in at $1.81, compared with $0.35.
Look at how far the revenue line has moved in two years…
Management also raised its fiscal 2027 revenue outlook to $72 billion to $82 billion. Fiscal 2026 revenue was about $39 billion, so even the low end implies sales nearly double.
One buyer sets the terms
The growth is real, but it’s concentrated. AI systems made up about 71% of revenue, up from 59% in the June quarter. One large data center customer accounted for 44%, compared with 28% across fiscal 2026.
CFO Mark Long addressed it directly on the November 3 earnings call: “Concentration at this level is a consequence of the scale at which AI infrastructure is now being built.”
That may be true. Still, buyers that big negotiate hard, and margins show it. Super Micro’s gross margin fell to 12.7% from 17.5% in the June quarter, although it beat the 12% to 12.5% range the company had flagged.
Set next to Dell, the gap looks even wider.
Dell doubled AI server revenue last quarter and still lifted its infrastructure segment’s operating margin to 15.0% from 8.8%. Super Micro, meanwhile, guided fiscal 2027 gross margin to 11.8% to 12.2%, because big AI deployments carry thinner margins than enterprise sales.
TIKR tracks 18 analysts on Super Micro Computer. How many say “Buy”?
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Cash is the harder question
Operations used $434 million of cash in the quarter, and capex took another $47 million. That leaves free cash flow at roughly negative $481 million in a record quarter.
Customer prepayments helped fund the buildout. Even so, Super Micro ended September with $6.9 billion of cash against $8.6 billion of bank debt and convertible notes.
Where has the cash gone over the past year?
The March quarter alone burned $6.6 billion in operating cash as Super Micro stocked up on components for large orders. The June quarter brought $747 million back, so this line swings hard with every big deployment.
The stock already prices in plenty of doubt. Its forward earnings multiple sits near the low end of its five-year range. Meanwhile, the chip smuggling case tied to former insiders still hangs over the name, though the company itself hasn’t been charged.
My take: This was a genuinely strong quarter, and the raised outlook matters more than one quarter’s margin dip. However, I’m wary of growth that leans this heavily on one buyer while the business burns cash to deliver it. At this valuation much of the risk looks priced in, so I’d treat it as a speculative hold until cash flow turns positive.
The next checkpoint is the December quarter report, expected in early February. It needs revenue at or above the $19.5 billion low end of guidance, gross margin holding near 12%, and operating cash flow back above zero.
So what is Super Micro stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
