Super Micro (SMCI) Up 3.5% Since Last Earnings Report: Can It Continue?

A month has gone by since the last earnings report for Super Micro Computer (SMCI). Shares have added about 3.5% in that time frame, outperforming the S&P 500.

But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Super Micro due for a pullback? Well, first let's take a quick look at the most recent earnings report in order to get a better handle on the recent catalysts for Super Micro Computer, Inc. before we dive into how investors and analysts have reacted as of late.

SMCI Q4 Earnings Surpass Expectations, Revenues Rise Y/Y

Super Micro Computer, Inc. reported fourth-quarter fiscal 2026 non-GAAP earnings of $1.70 per share, beating the Zacks Consensus Estimate of 68 cents. The bottom line increased 315% year over year.

SMCI generated net sales of $11.12 billion, which increased 93% year over year and 9% sequentially. Revenues also beat the Zacks Consensus Estimate by 1.09%. The strong performance reflected continued demand for AI infrastructure, as well as a sharp pickup in enterprise and channel activity.

SMCI Sees Strong AI Demand Despite Customer Readiness Delays

Super Micro Computer's fourth-quarter revenues came in the low end of its previously provided $11-$12.5 billion guided range, primarily due to delays in customer readiness. Management said some deployments were delayed by shortages or readiness issues related to power, cooling and networking, with the related revenues expected to be recognized in subsequent quarters.

The company disclosed more than $60 billion in new orders, driving its order book and backlog to record levels entering fiscal 2027. Management expects more than 80% of future revenues to come from AI-related solutions based on its backlog.

AI solutions accounted for approximately 60% of fourth-quarter revenues compared with more than 80% in the prior quarter, primarily because of the timing of large AI project ramps. Meanwhile, enterprise and channel revenues rose 172% year over year and 98% sequentially to $5.6 billion, accounting for 50% of total revenues.

The company is also broadening its customer base. Super Micro Computer added several hundred enterprise and other customers over the past year, while the number of customers generating more than $1 billion in annual revenues increased to nine in fiscal 2026 from four in fiscal 2025.

Super Micro Computer's Mix Shift Boosts Profitability

SMCI's profitability improved sharply in the fourth quarter as its non-GAAP gross margin increased to 17.6% from 10.1% as posted in the previous quarter.

Management attributed the 750-basis-point sequential expansion in non-GAAP gross margin primarily to a better-than-anticipated customer and product mix.

Non-GAAP operating margin increased to 14.3% from 7.2% in the previous quarter. Non-GAAP operating expenses rose 49% year over year to $357 million, reflecting higher headcount and sales and marketing expenses.

Management is also expanding its higher-margin enterprise CPU-based server, storage and IoT businesses while benefiting from growing demand for inferencing and agentic AI products. Super Micro expects its Data Center Building Block Solutions (DCBBS) strategy, which integrates servers, storage, liquid cooling, networking, software and services, to increasingly contribute to profitability.

SMCI's Cash Flow Improves, But Working Capital Remains Elevated

Super Micro Computer generated $747 million of cash from operations in the fourth quarter of fiscal 2026 compared with $6.6 billion of cash used in operations in the previous quarter. Capital expenditures totaled $25 million, resulting in free cash flow of $722 million.

However, working-capital requirements remained high. Ending inventory increased to $12.9 billion from $11.1 billion in the third quarter as the company built inventory in anticipation of higher fiscal 2027 revenues. The cash conversion cycle increased to 149 days from 106 days, driven by higher inventory days and lower days payable outstanding. Management expects the cash conversion cycle to normalize based on the terms of its current backlog.

Super Micro Computer ended June with $7.5 billion in cash and $8.7 billion of bank borrowings and convertible-note debt, resulting in net debt of approximately $1.2 billion. The company also raised $5.6 billion through common stock and mandatory convertible preferred stock offerings during the quarter to support working-capital needs associated with its new orders.

SMCI Expands DCBBS and Manufacturing Capacity

Super Micro Computer is positioning DCBBS as a key differentiator as customers increasingly seek integrated solutions for AI factories and data centers. The platform combines GPU and CPU servers, enterprise storage, direct liquid cooling, networking, data center management software and lifecycle services. The company believes the turnkey approach can accelerate customers' time-to-deployment and time-to-online while reducing total cost of ownership.

The company is also expanding its manufacturing footprint to address rising AI infrastructure demand. Super Micro recently announced a 32-acre DCBBS campus in Silicon Valley, taking its U.S. footprint to nearly 4 million square feet. Its facilities in Taiwan, Malaysia and the Netherlands are also ramping up, with total manufacturing capacity expected to exceed 6,000 racks per month, including more than 3,000 direct liquid-cooled racks.

On the product front, Super Micro is shipping NVIDIA-based GB300 NVL72, HGX B300 and RTX 6000 Pro systems while preparing Vera Rubin systems. The company also launched its AMD Helios product line and MI450 Total Solution and is shipping Intel Xeon 6+ platforms while developing Arm AGI processor-based systems.

SMCI Guides for Strong Fiscal 2027 Revenue Growth

For the first quarter of fiscal 2027, Super Micro expects net sales of $14.5-$15.5 billion, with non-GAAP adjusted earnings of $1.01-$1.10 per share. The company expects first-quarter fiscal 2027 non-GAAP gross margin to be between 10.4% and 10.8%, significantly below the unusually strong fourth-quarter level as customer and product mix normalizes.

For full-year fiscal 2027, SMCI expects net sales of $65-$72 billion compared with $39.1 billion in fiscal 2026. The outlook reflects continued AI infrastructure demand, record backlog and increasing contributions from enterprise, sovereign AI, NeoCloud and agentic AI opportunities.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a upward trend in estimates revision.

The consensus estimate has shifted 59.4% due to these changes.

VGM Scores

Currently, Super Micro has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for value investors.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Super Micro has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.

Performance of an Industry Player

Super Micro is part of the Zacks Computer- Storage Devices industry. Over the past month, Sandisk Corporation (SNDK), a stock from the same industry, has gained 31.2%. The company reported its results for the quarter ended June 2026 more than a month ago.

Sandisk Corporation reported revenues of $8.97 billion in the last reported quarter, representing a year-over-year change of +371.6%. EPS of $39.25 for the same period compares with $0.29 a year ago.

Sandisk Corporation is expected to post earnings of $46.23 per share for the current quarter, representing a year-over-year change of +3689.3%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.

Sandisk Corporation has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.

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This article originally published on Zacks Investment Research (zacks.com).

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