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Shares of the Server Maker Jumped 20% in Early Trading, Pacing S&P 500 Gainers
Super Micro Computer says that business is booming and profitability is improving. Investors like the sound of that.
Shares of Supermicro (SMCI), as the company is commonly known, jumped 22% to $31 in early trading Wednesday after the server maker said it expects to report gross margins of between 15% and 17% for its fiscal fourth quarter, which ended on June 30. That’s a steep increase over the company’s previous guidance of 8.2% to 8.4%.
In a preliminary business update released late Tuesday, Supermicro estimated that revenue for the quarter will be closer to the low end of its previous forecast range of $11 billion to $12.5 billion. However, the company said that new orders in the period exceeded $60 billion, putting its backlog at a record level, indicating that the outlook for the coming quarters is strong.
The rosy view on margins from Supermicro gave shares of rival server makers a boost in early trading Wednesday. Hewlett Packard Enterprise (HPE) rose 5%, while Dell Technologies (DELL) jumped 8%, on an otherwise sluggish morning for U.S. stocks.
Coming into Wednesday’s session, Supermicro shares had lost nearly 50% over the past year. The stock, which traded above $110 in early 2024 amid optimism about the role the company would play in the AI data center boom, has slumped in recent years amid investor concerns about accounting irregularities and corporate governance.
Supermicro is scheduled to release its full earnings report after the closing bell on Aug. 11.
Read the original article on Investopedia
