Supermicro’s AI boom delivers US$19.9 billion quarter

AI infrastructure demand drives record quarterly sales

Super Micro Computer, Inc. (NASDAQ:SMCI) reported preliminary fiscal first-quarter sales of US$19.9 billion, almost four times the US$5.0 billion recorded in the same quarter a year earlier. The result also marked a sharp increase from US$11.1 billion in the preceding quarter, giving the AI infrastructure supplier a powerful opening to fiscal 2027.

GAAP net income climbed to US$1.594 billion from US$168 million a year earlier, while diluted earnings per share rose to US$1.75 from US$0.26. Adjusted for stock-based compensation, non-GAAP diluted EPS was US$1.81, compared with US$0.35 in the prior-year quarter. Adjusted EBITDA reached US$2.227 billion, or 11.2% of sales, against 6.7% a year earlier.

Margins retreat despite earnings acceleration

The less comfortable number sits in the margin line. GAAP gross margin was 12.7%, down from 17.5% in the June quarter, although it improved from 9.3% a year earlier. Non-GAAP gross margin was 12.8% after a US$8 million stock-based compensation adjustment.

The filing does not explain the quarter-to-quarter margin decline. Supermicro chief executive Charles Liang said the company’s Data Center Building Block Solutions, software, service and networking offerings were intended to enhance profitability, while also pointing to enterprise partnerships and expanding global production capacity. Those comments describe the company’s strategy, but the latest figures leave the durability of margins as an open question while sales scale rapidly.

US$82 billion revenue ceiling raises execution stakes

Supermicro expects fiscal second-quarter sales of US$19.5 billion to US$21.5 billion, with GAAP diluted EPS of US$1.59 to US$1.83 and non-GAAP diluted EPS of US$1.66 to US$1.90. For the full fiscal year, its sales outlook spans US$72 billion to US$82 billion. The company’s second-quarter GAAP EPS forecast includes approximately US$89 million of stock-based compensation expense, net of related tax effects, that is excluded from the non-GAAP measure.

That guidance implies another quarter of very high sales, but the release provides no analyst consensus against which to measure the forecast. The reported figures are also preliminary: management and the audit committee have yet to complete their review, and the final results may change.

Working capital absorbs cash as balance sheet expands

Operating cash flow was negative US$434 million, despite the sharp increase in profit. Accounts receivable rose by US$3.56 billion during the quarter and inventories increased by US$2.48 billion, while deferred revenue rose by US$3.05 billion. Capital expenditure and investments were comparatively modest at US$47 million.

Supermicro ended September with US$6.9 billion in cash and cash equivalents, alongside US$8.6 billion in bank debt and convertible notes. The board also declared a US$0.875 dividend per depositary share on its 7% mandatory convertible preferred stock, payable on December 1 to holders recorded on November 15. The immediate financial test is whether revenue growth can continue to outpace the cash required to fund receivables, inventory and expansion.