Super Micro Computer (NASDAQ: SMCI) delivered a fiscal fourth-quarter report that presented a tale of two expectations. While the artificial intelligence (AI) server maker’s revenue for the period ended June 30, 2026, nearly doubled year-over-year to $11.1 billion, it narrowly missed the $11.55 billion analysts had projected. However, the company simultaneously unveiled a fiscal 2027 revenue forecast that dwarfed Wall Street’s consensus, sending its stock higher in extended trading and the subsequent session.
Ambitious 2027 Outlook Outshines Quarterly Shortfall
The key driver behind the market’s positive reaction was Super Micro’s guidance for fiscal year 2027. Management projected revenues in the range of $65 billion to $72 billion, a figure that stands a substantial $16 billion above the $52.5 billion consensus estimate from analysts polled by LSEG, when measured at the midpoint of the guidance range. This ambitious outlook suggests an anticipated growth rate of 66% to 84% for fiscal 2027.
Quarterly Performance and Margin Strength
Despite the slight miss on the quarterly revenue target, the underlying performance of the fourth quarter was robust. Revenue climbed 93% from $5.8 billion in the prior year’s corresponding quarter and was up from $10.2 billion in fiscal Q3. This brought the total fiscal 2026 revenue to $39.1 billion, a significant 78% increase from $22.0 billion in fiscal 2025.
A standout metric for the quarter was Super Micro’s gross margin, which reached 17.5%. This figure exceeded the company’s own preliminary guidance of 15% to 17% flagged in July and was a dramatic improvement from the 9.9% gross margin reported in fiscal Q3 and 9.5% in the year-ago period. Management attributed this margin expansion primarily to a more favorable mix of enterprise customers and the widespread adoption of its Data Center Building Block Solutions architecture. This margin improvement significantly boosted profitability, with net income reaching $1,178 million, a sixfold increase from $195 million a year earlier.
Order Backlog and Capital Requirements
The impressive fiscal 2027 revenue forecast is underpinned by a substantial order book. Super Micro reported receiving over $60 billion in new orders during the fourth quarter alone, propelling its backlog to record levels as it enters fiscal 2027. This provides a solid foundation for the projected revenue growth, though the company acknowledges that orders can be subject to slippage or reduction before conversion into revenue, and some commitments may not be firm.
However, achieving this revenue scale will necessitate significant working capital. The balance sheet reflects the costs associated with building and shipping servers before customer payments are received. Inventories ballooned to $12.9 billion by year-end, nearly tripling from $4.7 billion a year prior, while receivables grew to $6.1 billion from $2.2 billion. Super Micro concluded the year with $7.5 billion in cash against $8.7 billion in bank debt and convertible notes. While operating cash flow turned positive at $747 million in the fourth quarter, the projected revenue scale could continue to strain the balance sheet.
Valuation and Margin Doubts
Even after a notable post-earnings jump, Super Micro’s shares trade at approximately 11.5 times earnings based on fiscal 2026 earnings per share of $3.26. This multiple is closer to 10 times the annualized earnings implied by the midpoint of the company’s first-quarter guidance. Such valuations are typically associated with companies expected to contract, not those guiding for revenue growth exceeding 66%. Analysts suggest that the market’s hesitation may stem from doubts about the sustainability of the recent margin improvement. The 17.5% gross margin in the fourth quarter is an outlier, as the full fiscal year gross margin was 10.8%, slightly below the prior year’s 11.1%. The future profit story for Super Micro hinges on how much of this margin expansion can be sustained.
It is important to note that these results are preliminary, as the company’s year-end financial closing procedures are not yet complete. Furthermore, Super Micro’s board is conducting an independent review of certain transactions related to alleged export-control issues, the outcome of which could potentially impact future forecasts.
