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Super Micro shares took a hit, dropping by as much as 15% in after-hours trading following the company’s report of a slightly lower revenue than the expectations set for its fiscal third quarter. The server maker’s performance fell short in comparison to LSEG consensus figures, with earnings per share coming in at $6.65 adjusted versus the anticipated $5.78, and revenue at $3.85 billion as opposed to the expected $3.95 billion.

Despite the revenue miss, there is optimism in the company’s future as it provided robust top-line guidance. Super Micro noted a significant 200% increase in revenue year-over-year for the quarter ending on March 31, a substantial improvement from the 103% growth in the previous quarter.

The surge in net income was also notable, with figures reaching $402.5 million, or $6.56 per share, compared to $85.8 million, or $1.53 per share, in the corresponding quarter the prior year. Looking ahead, Super Micro raised its fiscal 2024 revenue guidance to a range of $14.7 billion to $15.1 billion, higher than the initially projected $14.3 billion to $14.7 billion.

Notwithstanding the decline in shares post-announcement, Super Micro’s stock has displayed considerable strength, climbing by 205% year-to-date, in stark contrast to the meager 6% gain seen in the S&P 500 stock index. The company faces fierce competition from established IT equipment providers like Hewlett Packard Enterprise, but it has gained investor favor due to its potential in providing servers equipped with Nvidia graphics processing units for AI applications.

Despite its success, Super Micro has faced supply chain challenges due to component shortages, limiting its full potential during the quarter. CEO Charles Liang remains optimistic about the future, highlighting the strong growth trajectory driven by the increasing demand for AI solutions. To support this growth, the company conducted a secondary offering this year to raise capital.

As part of its strategic approach, Super Micro is eyeing the sale of liquid-cooled servers to offer more energy-efficient alternatives compared to traditional air-cooled options. CFO David Weigand emphasized the ongoing improvements in the company’s supply chain, pointing towards a bright future ahead as the demand for AI technologies continues to surge.

Earnings

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