Supermicro, the server maker that builds racks around Nvidia and AMD chips, reported record sales for its fiscal first quarter and raised its full-year outlook. The sales number was already known in outline because the company pre-announced it on October 20. What the full report added was the margin detail, the balance sheet and a guidance range well above what analysts were modeling.
The quarter in numbers
According to Supermicro's results release, dated November 3, for the quarter ended September 30, 2026:
- Net sales were $19.9 billion, versus $11.1 billion in the fourth quarter of fiscal 2026 and $5.0 billion in the first quarter of fiscal 2026.
- Gross margin was 12.7%, versus 17.5% in the prior quarter and 9.3% a year earlier. Non-GAAP gross margin was 12.8%.
- Net income was $1,594 million, versus $1,178 million in the prior quarter and $168 million a year earlier.
- Diluted earnings per share were $1.75 (non-GAAP $1.81), versus $0.26 (non-GAAP $0.35) a year earlier.
- Cash flow used in operations was $434 million, and capital expenditures and investments were $47 million.
Supermicro described the result as a shift in what it sells. CEO Charles Liang said the company's "transformation into a Total AI and IT Datacenter Solution provider continues to accelerate." He pointed to its Data Center Building Block Solutions line, which covers products "from gigawatt-scale datacenters down to single-container PODs."
Beat the company's own guidance
On October 20, Supermicro published a preliminary business update. It estimated first-quarter revenue of $18.5 billion to $19.5 billion, against its own guidance of $14.5 billion to $15.5 billion, "primarily due to increased demand for AI platforms." It estimated gross margin of 12.0% to 12.5%, against guidance of 10.4% to 10.8%, "primarily due to customer and product mix."
The final figures landed above both preliminary ranges. Net sales of $19.9 billion were above the top of the $18.5 billion to $19.5 billion range, and the 12.7% gross margin was above the top of the 12.0% to 12.5% range. Yahoo Finance said the company beat Wall Street's expectations on both the top and bottom lines.
A higher outlook for the year
Supermicro now expects net sales of $19.5 billion to $21.5 billion for the second quarter of fiscal 2027, which ends December 31, 2026. Yahoo Finance said analysts had been calling for $16.35 billion. For the full fiscal year 2027, the company expects net sales of $72.0 billion to $82.0 billion. Investing.com reported in its earnings preview that management guided the year to $65 billion to $72 billion in August.
Non-GAAP earnings per share for the second quarter are guided to $1.66 to $1.90, and GAAP earnings per share to $1.59 to $1.83.
Margin is the trade-off
Net sales rose from $11.1 billion to $19.9 billion between the fourth quarter and the first quarter, but gross margin fell from 17.5% to 12.7%. Supermicro's release does not explain the drop. The October 20 update tied the quarter's margin to "customer and product mix," and the company's own forward-looking statements warn that as it targets larger customers, "our margins may be lower."
The balance sheet shows how much money is tied up in those orders, based on the release's tables:
- Accounts receivable rose from $6.1 billion at June 30 to $9.7 billion at September 30.
- Inventories rose from $12.9 billion to $15.1 billion.
- Current deferred revenue rose from $1.6 billion to $4.3 billion.
- Cash and cash equivalents were $6.9 billion, and total bank debt and convertible notes were $8.6 billion.
Operating cash flow was negative $434 million for the quarter even with $1.6 billion in net income. The cash flow statement in the release shows that increases in accounts receivable and inventories used cash, partly offset by a $3.1 billion increase in deferred revenue.
SambaNova and the inference angle
The same day, SambaNova announced a collaboration in which Supermicro will build, sell and support inference systems that pair Nvidia GPUs with SambaNova's SN50 chips. In SambaNova's description, the GPUs run the prefill phase, which reads the prompt, and the SN50 chips run the decode phase, which writes the response. Supermicro is "initially planning for 10,000 SN50 RDU chips," starting with neoclouds and sovereign clouds, then enterprises.
StorageReview noted that both companies describe the 10,000 chips as a planning figure, and that neither has disclosed a purchase commitment, pricing or a ship date.
Why it matters
Supermicro's results are one indicator of how much AI server hardware is being ordered, and the company attributed its beat over guidance mainly to demand for AI platforms. They also arrive in a volatile week for AI infrastructure stocks. Yahoo Finance reported that Supermicro shares had fallen 27% over the past month after a Gartner report said 80% of neocloud companies would cease operations by 2030 because of a lack of return on invested capital. The same article said CoreWeave is a Supermicro customer.
The election results added to the pressure on data center names, which we covered in Midterms Hit AI Stocks. Supermicro's own numbers do not address that risk. They show record sales of AI systems, a lower gross margin and larger receivables and inventories. For the chip side of the same demand, see our posts on AMD's third quarter and Intel's third quarter.
Server boards are another input to that demand. Our post on the Panasonic Taiwan plant fire covers a November 4 fire at a supplier to Taiwan's circuit-board makers, and the conflicting estimates of its supply impact.
The figures in Supermicro's release are preliminary and unaudited, and the company says final results may differ.
Sources
- Supermicro Announces First Quarter of Fiscal Year 2027 Financial Results
- Supermicro Provides First Quarter of Fiscal Year 2027 Preliminary Business Update
- Yahoo Finance: Supermicro tops Q1 estimates, offers strong Q2 outlook
- Investing.com: SMCI earnings preview
- SambaNova: SN50 chips to power Supermicro's new inference racks
- StorageReview: Supermicro plans 10,000 SambaNova SN50 RDUs
