Shares of Super Micro Computer (SMCI), or Supermicro, tumbled 8.6% on Feb. 5, erasing most of its post-earnings gains amid a broader market stumble.
A day earlier (Feb. 4), Super Micro stock surged 13% after the server maker reported better-than-expected earnings and revenue for the fiscal second quarter ended Dec. 31, 2025.
Super Micro is a California-based server maker that also provides server management software and storage systems for enterprise data centers, cloud computing, and artificial intelligence.
The company posted adjusted earnings of 69 cents a share for its fiscal second quarter, topping analysts’ estimates of 49 cents. Revenue surged 123% year over year to $12.7 billion, well above expectations of $10.4 billion.
Guidance for the current quarter also topped expectations, with the company forecasting adjusted earnings of 60 cents a share and revenue of $12.3 billion, compared with Wall Street estimates of 46 cents and $11.3 billion.
However, Super Micro’s gross margin fell to 6.3% in the fiscal second quarter, down from 9.3% in the prior quarter and below management’s previous guidance of 6.5%. Gross margin is a key metric Wall Street watches for pricing power and valuation support.
This highlights a key challenge for Super Micro’s business, as the company is more of a price taker than a price setter. It is caught between paying high prices for chips from Nvidia (NVDA) and AMD (AMD) and selling systems to large customers.
As a result, it has limited room to negotiate pricing and protect margins.
Related: Analysts revisit Nvidia-backed AI stock ahead of earnings
The company is seeing “near-term margin pressure” from “customer mix, tariffs, international facility expansion, and key components shortage,” CEO Charles Liang said on an earnings call.
Still, Super Micro offered some reassurance, with Liang pointing to new customer flows, stronger margins, and AI demand ahead.
“Our focus on enterprise business, design for manufacturing improvement, and the faster-growing DCBBS (Data Center Building Block Solutions) portfolio all help us gain new customers, support a higher growth, and a net margin going forward,” Liang said.
“Based on our broad customer backorder forecast and commitment, we believe demands for AI and IT infrastructure remain unprecedentedly strong,” Liang added.
Super Micro shares were on a roller coaster last year, plunging after its August and November 2025 earnings reports disappointed investors.
Once an artificial intelligence darling, the stock peaked near $118 in March 2024 and has since fallen to $30.85 as of Feb. 5’s close.
