Group 1 - AMD reported a strong Q1 2025 performance with revenue of $7.438 billion, a year-over-year increase of 35.90%, exceeding market expectations of $7.13 billion [3] - The data center segment, which includes AI graphics and CPUs, generated $3.674 billion in revenue, up 57.21% year-over-year, with an operating margin of 23.37% [3] - AMD anticipates Q2 2025 revenue of approximately $7.4 billion, with a non-GAAP gross margin expected to be 43%, impacted by $800 million in inventory and related reserve costs due to new export controls [3] Group 2 - Supermicro's Q3 2025 revenue was $4.6 billion, a year-over-year increase of 19.48%, but significantly below market expectations of $5.42 billion [6] - Non-GAAP diluted earnings per share for Supermicro fell 53.03% year-over-year to $0.31, also below market expectations of $0.50 [6] - Supermicro lowered its full-year revenue guidance from $23.5 billion-$25 billion to $21.8 billion-$22.6 billion due to delayed customer deliveries and increased inventory reserves [6] Group 3 - The AI semiconductor industry faces challenges due to new tariffs and export controls, significantly impacting companies like Nvidia and AMD [8] - Nvidia's CEO indicated that being excluded from the Chinese AI market would result in substantial losses, as the Greater China region accounted for 39% of its revenue in FY2024 [8] - The uncertainty from U.S. policies and tariffs may lead clients to postpone expansion and technology upgrades, affecting the upstream supply chain, including companies like Supermicro [7][9]

I'm a full time value investor and writer who enjoys using classical value ratios to pick my portfolio. My previous working background is in private credit and CRE mezzanine financing for a family office. I'm also a fluent Mandarin speaker in both business and court settings, previously serving as a court interpreter. I have spent a good chunk of my adult working life in China and Asia. I have worked with top CRE developers in the past including The Witkoff Group , Kushner Companies, Durst Organization and ...

With just one subscription to Beyond the Wall Investing , you can save thousands of dollars a year on equity research reports from banks. You'll keep your finger on the pulse and have access to the latest and highest-quality analysis of this type of information.Back in early March, I published my bullish upgrade on Super Micro Computer, Inc. (NASDAQ: SMCI ) stock (from "Hold" to "Buy"), expecting that SMCI should keep reversing massively in the span of the next few weeks as itsHe leads the investing group B ...

Core Viewpoint - Super Micro Computer's fourth-quarter revenue guidance significantly underperformed analyst expectations, indicating potential obstacles in the AI infrastructure boom [4][5]. Financial Performance - For the third quarter, Super Micro reported revenue of $4.6 billion, below the expected $5.42 billion, with adjusted earnings per share of $0.31, also lower than the anticipated $0.50 [3][4]. - The net profit per share dropped to $0.17, a substantial decline from $0.66 in the same period last year [4]. - The fourth-quarter revenue guidance is set between $5.6 billion and $6.4 billion, which is far below the market expectation of $6.82 billion [5][6]. - The full-year revenue forecast for fiscal 2025 has been revised down from $23.5-25 billion to $21.8-22.6 billion [8]. Market and Economic Context - CEO Charles Liang noted that customer hesitation between current Hopper and upcoming Blackwell GPUs has led to delayed purchasing decisions [6]. - Economic uncertainty and the impact of Trump's tariffs are beginning to manifest, contributing to the company's cautious outlook [6]. Company Challenges - The past year has been tumultuous for Super Micro, with significant stock price fluctuations and scrutiny over accounting practices following a report from Hindenburg Research alleging "accounting manipulation" [10]. - The resignation of Ernst & Young as the company's auditor raised concerns about financial reporting and internal controls [10]. Future Outlook - Despite short-term challenges, Super Micro's positioning as an AI infrastructure supplier remains attractive, utilizing chips from Nvidia and AMD [12]. - Analysts express caution regarding the company's ability to regain growth momentum amid procurement cycles, competitive pressures, and macroeconomic uncertainties [15].

Financial Performance - Supermicro's Q3 FY25 revenue reached $4600 million, a 19% decrease QoQ but a 19% increase YoY[33] - The non-GAAP gross margin for Q3 FY25 was 9.7%, a decrease of 220 bps QoQ and 590 bps YoY[33] - Non-GAAP earnings per share for Q3 FY25 were $0.31, down $0.28 QoQ and $0.35 YoY[33] - Cash flow from operations in Q3 FY25 was $627 million[33] Revenue Breakdown - Server and storage systems contributed $4459 million to the Q3 FY25 revenue, a 19% decrease QoQ but a 21% increase YoY[33] - Subsystems and accessories generated $141 million in revenue, a 26% decrease QoQ and a 7% decrease YoY[33] Future Outlook - The company projects Q4 FY25 revenue to be between $5600 million and $6400 million[35] - Full year FY25 revenue is projected to be between $21800 million and $22600 million[35] - The outlook for Q4 of fiscal year 2025 GAAP diluted net income per common share includes approximately $63 million in expected stock-based compensation expense, net of the related tax effects of $18 million, which are excluded from non-GAAP diluted net income per common share[36] Strategic Initiatives - Supermicro is targeting over 30% of new data center deployments to use liquid cooling solutions in the next 12 months[10] - The company's manufacturing capacity is expanding, including a third campus in Silicon Valley, and new facilities in Mexico, Taiwan, and Malaysia[10, 32] - Supermicro's rack production capacity has reached 5,000 racks per month, including over 2,000 DLC racks[24]

Core Viewpoint - Super Micro Computer (SMCI) reported disappointing Q3 results for FY2025, with earnings per share of $0.31 and sales of $4.6 billion, falling short of market expectations [1][2] - The company anticipates Q4 sales between $5.6 billion and $6.4 billion, with earnings per share projected at $0.40 to $0.50, while analysts expected $6.59 billion in sales and $0.64 in earnings per share [1][2] Group 1 - The poor performance and forecasts have raised concerns among investors, attributed to customers delaying procurement plans [1] - CEO Charles Liang expressed confidence in achieving long-term goals despite short-term impacts from economic uncertainty and tariffs [1] - The gross margin for Q3 decreased by 220 basis points compared to the previous quarter, primarily due to increased inventory reserves from older products and costs associated with accelerating new product launches [1] Group 2 - Analysts suggest that some customers may delay purchases until Super Micro's products are equipped with NVIDIA's new Blackwell chips, with uncertainties related to tariffs and macroeconomic issues potentially impacting near-term demand [2] - Super Micro had previously been optimistic about long-term revenue, projecting sales of $40 billion for FY2026, nearly double the current fiscal year's expectations, driven by strong demand for AI servers [2] - The company faced risks of delisting due to late submission of its FY2024 annual report, with its auditor resigning over concerns about governance and transparency [2] Group 3 - Following the earnings report, Super Micro's stock fell by 5.7% in after-hours trading [3]

Group 1 - Super Micro Computer (SMCI) reported quarterly earnings of $0.31 per share, exceeding the Zacks Consensus Estimate of $0.30 per share, but down from $0.67 per share a year ago, representing an earnings surprise of 3.33% [1] - The company posted revenues of $4.6 billion for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 1.13%, compared to $3.85 billion in the same quarter last year [2] - Super Micro has outperformed the S&P 500, gaining about 5.5% since the beginning of the year, while the S&P 500 has declined by 3.9% [3] Group 2 - The current consensus EPS estimate for the upcoming quarter is $0.61 on revenues of $6.69 billion, and for the current fiscal year, it is $2.28 on revenues of $23.16 billion [7] - The Computer-Storage Devices industry, to which Super Micro belongs, is currently ranked in the bottom 7% of over 250 Zacks industries, indicating potential challenges ahead [8] - The estimate revisions trend for Super Micro is currently unfavorable, resulting in a Zacks Rank 4 (Sell) for the stock, suggesting it may underperform the market in the near future [6]

Financial Data and Key Metrics Changes - The company's Q3 net revenue was $4.6 billion, down 19% quarter over quarter but up 19% year over year [19][7] - Non-GAAP EPS for Q3 was $0.31, a decline from $0.66 in the previous year, primarily due to inventory write-downs [9][24] - Non-GAAP gross margin for Q3 was 9.7%, down 220 basis points from 11.9% in Q2, attributed to higher inventory reserves and lower volumes [22][23] Business Line Data and Key Metrics Changes - AI GPU platforms accounted for over 70% of revenues, with significant contributions from both enterprise and cloud service provider markets [19] - The enterprise channel vertical generated $1.9 billion, representing 42% of revenues, up from 25% in the previous quarter [20] - OEM appliance and large data center vertical revenues were $2.6 billion, down from 75% in the last quarter to 57% in Q3 [21] Market Data and Key Metrics Changes - The US represented 60% of Q3 revenues, with Asia at 30%, Europe at 6%, and the rest of the world at 4% [22] - Year-over-year, US revenues increased by 3%, while Asia saw a 77% increase [22] - China continued to represent less than 1% of sales in Q3 [22] Company Strategy and Development Direction - The company is focused on expanding its market share in IT and AI despite macroeconomic challenges [8] - Introduction of the DCBBS (Data Center Building Block Solutions) aims to streamline data center deployment and reduce costs [12][16] - The company is committed to enhancing its direct liquid cooling (DLC) technology, aiming to double the volume of AI racks shipped in the coming year [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in meeting long-term growth targets despite near-term macroeconomic uncertainties [17] - Anticipated Q4 revenue is projected to be at least $6 billion, with a cautious outlook on gross margins around 10% [17][28] - The company expects to navigate financial challenges while strengthening its leadership in product and technology innovation [16] Other Important Information - The company raised $700 million in gross proceeds from a new convertible note to strengthen working capital and support R&D investments [26] - Q3 cash flow from operations was $627 million, a significant improvement from a cash flow usage of $240 million in the previous quarter [25] Q&A Session Summary Question: Customer order trends amid macroeconomic uncertainty - Management noted that while tariffs and macroeconomic concerns are present, they still see strong orders and anticipate a strong June quarter [34][35] Question: Changes in gross margin expectations - Management indicated that the cautious guidance on margins is due to tariff concerns and the transition from older technology platforms to newer ones [36][38] Question: Midterm demand outlook and revenue targets - Management remains confident in achieving the $40 billion revenue target for fiscal 2026, citing strong demand for new products [41][42] Question: Differences in demand between product lines - Management observed strong demand for both GB 200 MVL 72 and liquid cooling solutions, although some customers are delaying decisions [44][45] Question: Impact of tariffs on U.S. manufacturing - Management emphasized the advantages of U.S. domestic manufacturing in responding quickly to new technologies and mitigating tariff impacts [82][83] Question: Supplier allocations for new products - Management acknowledged ongoing allocation issues but noted improvements compared to previous periods [86] Question: Clarification on inventory reserves - Management explained that inventory reserves impacted margins significantly in Q3, but they expect a reduction in reserves for the upcoming quarters [72][74]

Financial Data and Key Metrics Changes - For Q3 2025, the company reported net revenue of $4.6 billion, a decrease of 19% quarter over quarter but an increase of 19% year over year [21][24] - Non-GAAP EPS for Q3 was $0.31, down from $0.66 in the previous year, primarily due to an inventory write-down of older generation GPUs [10][26] - Non-GAAP gross margin for Q3 was 9.7%, down 220 basis points from 11.9% in Q2, attributed to higher inventory reserves and lower volumes [24][25] Business Line Data and Key Metrics Changes - AI GPU platforms accounted for over 70% of revenues, with enterprise and cloud service provider markets driving demand [21] - Revenue from the enterprise channel was $1.9 billion, representing 42% of total revenues, up from 25% in the previous quarter [22] - OEM appliance and large data center vertical revenues were $2.6 billion, representing 57% of Q3 revenues, down from 75% in the last quarter [23] Market Data and Key Metrics Changes - By geography, the US represented 60% of Q3 revenues, Asia 30%, Europe 6%, and the rest of the world 4% [24] - Year over year, US revenues increased by 3%, Asia by 77%, while Europe decreased by 3% [24] - China continued to represent less than 1% of sales in Q3 [24] Company Strategy and Development Direction - The company is focused on expanding its market share in IT and AI despite macroeconomic challenges and tariff impacts [9] - Introduction of the DCBBS (Data Center Building Block Solutions) aims to streamline data center deployment and reduce costs [12][13] - The company is committed to enhancing its domestic manufacturing capacity and expanding operations in Malaysia, Taiwan, and Europe [16][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in meeting long-term growth targets despite near-term macroeconomic uncertainties [19] - For Q4, the company anticipates revenues of at least $6 billion, with expectations for strong growth driven by new product launches [19][30] - Management noted that while there are concerns regarding tariffs and macroeconomic conditions, they see strong order momentum [35][36] Other Important Information - The company recorded a net cash position of $44 million, a significant improvement from a negative net cash position of $479 million in the previous quarter [27] - The company expects Q4 GAAP diluted EPS to be in the range of $0.30 to $0.40, and non-GAAP diluted EPS to be $0.40 to $0.50 [29][30] Q&A Session Summary Question: Are customers pulling back orders due to macroeconomic conditions? - Management noted that while there are concerns, they see strong orders and expect a strong quarter in June [35][36] Question: What is the outlook for gross margins? - Management indicated that gross margins are impacted by tariffs and the transition to new technology platforms, leading to a more cautious outlook [38][39] Question: Is the $40 billion revenue target for fiscal 2026 still in place? - Management remains confident in long-term growth but did not provide specific guidance for fiscal 2026 at this time [42][45] Question: How is the demand for different product lines? - There is strong demand for both GB 200 MVL 72 and liquid cooling solutions, but some customers are delaying decisions [46][47] Question: What is the impact of tariffs on operations? - Management is closely monitoring the tariff situation and adjusting logistics to minimize impact [88] Question: What is the status of the CFO search? - The company is actively looking for a new CFO to support its growth [104]

Financial Data and Key Metrics Changes - For Q3 2025, the company's net revenue was $4.6 billion, which represents a 19% increase year-over-year but a 19% decrease quarter-over-quarter [18][7] - Non-GAAP EPS for Q3 was $0.31, down from $0.66 in the previous year, primarily due to an inventory write-down of older generation GPUs [8][23] - Non-GAAP gross margin for Q3 was 9.7%, down 220 basis points from 11.9% in Q2, attributed to higher inventory reserves and lower volume [21][22] Business Line Data and Key Metrics Changes - AI GPU platforms accounted for over 70% of revenues, with significant contributions from both enterprise and cloud service provider markets [18] - The enterprise channel vertical generated $1.9 billion, representing 42% of revenues, up from 25% in the previous quarter [19] - OEM appliance and large data center vertical revenues were $2.6 billion, representing 57% of Q3 revenues, down from 75% in the last quarter [20] Market Data and Key Metrics Changes - By geography, the US accounted for 60% of Q3 revenues, Asia 30%, Europe 6%, and the rest of the world 4% [21] - Year-over-year, US revenues increased by 3%, Asia by 77%, while Europe decreased by 3% [21] - China represented less than 1% of sales in Q3 [21] Company Strategy and Development Direction - The company is focused on expanding its market share in IT and AI despite macroeconomic challenges and tariff impacts [7] - The introduction of the DCBBS (Data Center Building Block Solutions) aims to streamline data center deployment and reduce costs [10][11] - The company is committed to enhancing its domestic manufacturing capacity and expanding operations in Malaysia, Taiwan, and Europe [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in meeting long-term growth targets despite near-term macroeconomic uncertainties [16] - For Q4, the company anticipates revenues of at least $6 billion, with expectations for continued growth driven by new product launches [16][25] - Management noted that customer order trends remain strong, with expectations for a robust June quarter [31][32] Other Important Information - The company recorded a net expense of $31.7 million in other income and expenses for Q3, primarily due to interest expenses and foreign exchange impacts [22] - Cash flow generated from operations for Q3 was $627 million, a significant improvement from a cash flow usage of $240 million in the previous quarter [23][24] - The company amended the terms of its existing convertible notes and raised $700 million in gross proceeds from a new convertible note offering [24] Q&A Session Summary Question: Customer order trends in light of macroeconomic conditions - Management indicated that while tariffs and macroeconomic uncertainties concern some customers, they still see strong orders and expect a strong June quarter [31][32] Question: Changes in gross margin expectations - Management noted that gross margin expectations are impacted by tariff concerns and the transition from older technology platforms to newer ones [35][36] Question: Midterm demand outlook and revenue targets - Management remains confident in midterm growth and demand, particularly for new products like Blackwell and DCBBS solutions [40][42] Question: Differences in demand between product lines - Management observed strong demand for both GB 200 MVL 72 and liquid cooling solutions, but noted some delays in customer decision-making [45][46] Question: Impact of inventory reserves on margins - Management clarified that inventory reserves significantly impacted margins in Q3, but they expect lower reserves in Q4 [77][79] Question: Platform decisions affecting customer orders - Management confirmed that customers are transitioning to newer platforms, which has influenced order timing and inventory reserves [81][84] Question: U.S. domestic manufacturing advantages - Management emphasized the benefits of U.S. manufacturing in responding quickly to new technologies and mitigating tariff impacts [87][88] Question: Supplier allocations and GPU availability - Management acknowledged ongoing allocation challenges but noted improvements compared to previous periods [93] Question: Capacity and CapEx reconciliation - Management confirmed that capacity remains robust, with ongoing investments in expanding production capabilities [96][98]