What Happened to SMCI’s Q4 Earnings? Can the $40 Billion Promise Be Fulfilled?

TradingKeyFeb 12, 2025 8:46 AM

TradingKey – Super Micro Computer (SMCI.US) experienced a rollercoaster ride around the release of its Q2 FY2025 earnings report, with its stock plunging 9% before rebounding 8% in after-hours trading. The guidance update became the main catalyst for this volatility.

Q2 FY2025 Financial Results

On Tuesday, February 11, after market close, Super Micro Computer (SMCI) released preliminary financial results for the second quarter of fiscal year 2025 (ended December 31, 2024):

- Earnings per share (EPS): $0.58–$0.60 vs. $0.61 expected

- Revenue: $5.6–$5.7 billion vs. $5.77 billion expected

Both revenue and EPS missed expectations, and SMCI also revised its full-year FY2025 revenue guidance downward, lowering projections from $26–$30 billion to a new range of $23.5–$25 billion.

A Volatile Market Reaction

The market appeared to anticipate a weak earnings report, as SMCI’s stock dropped 9.47% on February 11, following several days of gains. However, the company's FY2026 forecast shifted the narrative entirely.

SMCI projected that revenue in FY2026 could reach $40 billion, surpassing the previously expected $29.18 billion, primarily due to the anticipated widespread adoption of its direct-liquid cooling (DLC) technology. The company expects over 30% of new data centers to adopt this technology within the next 12 months.

Following this announcement, SMCI’s stock surged approximately 8% in after-hours trading on February 11.

A Turnaround or Just a Pipe Dream?

TradingKey analyst Petar Petrov notes that while Q2 results and FY2025 guidance were underwhelming, two factors hyped up investors:

1. Management Confidence

SMCI’s management is confident that they will fill its annual report by February 25th, before the deadline SEC has set. This shows the management dedication to moving away from the corporate governance problems they were experiencing last year, improving their lost credibility in the eyes of the investors.

2. Ambitious 2026 Revenue Target

For the fiscal 2026, SMCI set a revenue target of 40 billion dollars – a significantly higher number than the previously expected 30 billion dollars.

Despite corporate governance concerns, Petrov believes SMCI has a strong business case to support its high revenue growth projections:

- Nvidia Partnership: SMCI has a very strong partnership with Nvidia, incorporating the newest and most powerful Nvidia chips into their data center solutions.

- Cutting-Edge DLC Technology: The direct-liquid cooling technology they specialize in is designed to handle the highest levels of computation power for AI workload and can be deployed faster than the competitive products of HP and Dell, perfectly meeting the booming growth of data centers.

However, with the annual report yet to be released, there is still not full clarity on the company’s financial metrics, recommending a more cautious stance on the stock.

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