Earnings Preview | Super Micro Computer's Q3 revenue doubles, focus on market share and integration of Nvidia's latest products performance

According to the Zhitong Finance and Economics APP, Super Micro Computer Inc. (SMCI.US) will announce its third-quarter results after the close on April 30th (Tuesday). Market expectations indicate that Super Micro Computer is expected to achieve a revenue of USD 3.927 billion in the third quarter, a significant year-on-year increase of 206.04%; earnings per share of USD 5.46, a year-on-year growth of 256.86%.

It is understood that Super Micro Computer's main products include servers, storage systems, and full rack scale solutions, which can be used to deploy AI chips. Companies such as NVIDIA (NVDA.US), AMD (AMD.US), and Intel (INTC.US) all utilize their products.

Competitors in the industry include Dell Technologies (DELL.US), HP Inc. (HPQ.US), among others. However, what sets Super Micro Computer apart is its focus on high-intensity, high-density computing solutions, making it more suitable for AI deployment compared to its competitors. This advantage has allowed Super Micro Computer to outperform its competitors in the wave of AI, leading to a significant increase in its stock price.

As a leading AI server manufacturer, Super Micro Computer is expected to meet its previously provided upper revenue guidance for the third quarter, while making a relatively conservative sequential growth forecast for the fourth quarter. Investors will be focusing on the company's market share and its performance in integrating NVIDIA's latest products.

Over the past 12 months, Super Micro Computer's stock price has surged by 804%, far exceeding NVIDIA's 226% increase, thanks to the company's leading position as a server manufacturer in the AI boom.

In January of this year, Super Micro Computer raised its sales and profit guidance before announcing its second-quarter financial results. However, this time, breaking the tradition of providing preliminary performance, raised concerns among investors, leading to a one-day plunge of 23%.

It is worth noting that the company's profit margin may be further squeezed by intense market competition, and the label of low-end manufacturing makes investors more inclined to hold short-term positions, increasing the likelihood of significant stock price fluctuations in the short term.

Analyst Views

Wedbush analysts stated, "Super Micro Computer's forecast already includes expectations of over 20% quarterly growth. Over the past 18 months, the company's management guidance has shown both aggressive and conservative attitudes." The analysts at the firm believe that Super Micro Computer may either achieve an increase in its existing guidance or maintain the status quo.

J.P. Morgan stated, "With GPU supply constraints no longer a concern, investors will also closely monitor revenue growth from the third quarter to the fourth quarter, whether the company can achieve revenue growth to USD 20 billion or more by fiscal year 2025, and its leverage and expansion in operating profit margins. The firm's analysts have given Super Micro Computer an "overweight" rating with a target price of USD 1,150."

"While we expect the company to highlight its strong revenue growth, including year-on-year growth of over 200% in the third quarter and over 100% in the fourth quarter, we believe investors' focus will be on whether Super Micro Computer can maintain its share in the AI server market with the next generation of NVIDIA GPU products," J.P. Morgan analyst Samik Chatterjee wrote in an investor report"In particular, in the increasingly competitive background of server companies such as Dell (DELL.US) and Hewlett Packard Enterprise (HPE.US), as well as ODM (Original Design Manufacturer) companies, including ODM companies now involved in the reference design architecture of NVIDIA products."

Loop Capital analyst Ananda Baruah is bullish on AMD's leading position in the AI server market, raising the target price significantly from $600 to $1500. He pointed out, "As AMD has been included in the S&P 500 index, it is expected to maintain a P/E ratio of 20-30 times in the future. Baruah's target price indicates his prediction that AMD's earnings per share for the fiscal year 2026 will be between $50-60, with revenue ranging from $300-400 billion."

Wells Fargo analyst Aaron Rakers reiterated an "Hold" rating on AMD and maintained a target price of $960. The analyst believes, "Ahead of the financial report, AMD did not provide a positive pre-announcement as usual, which is considered negative, especially at a critical point in the field of artificial intelligence, exacerbating market concerns."

Not everyone has always been optimistic about the development trend of AI. Research firm CCS Insight recently pointed out that due to the increasing cost of running AI, growing calls for increased regulation of AI, among other reasons, generative AI may face a downturn in 2024. Gary Marcus, founder of the startup Robust.AI, also mentioned that the goal of achieving General Artificial Intelligence (AGI) is still far away for humanity