Super Micro (NASDAQ:SMCI) Earnings: What to Expect from Q3?

Super Micro Computer (NASDAQ:SMCI) will announce its Q3 Fiscal 2024 financial results on Tuesday, April 30. Unlike in the past, the company has not provided any upbeat business insights or data for the third quarter, resulting in an 18% pullback in its stock value over the month. Nonetheless, solid artificial intelligence (AI)-driven demand for its products may boost its top and bottom lines in Q3.

Super Micro provides high-performance server and storage solutions.

SMCI: Q3 Forecast

Analysts expect SMCI to report revenue of $4.01 billion in the third quarter, up about 213% from $1.28 billion in the prior-year quarter. The company’s sales will likely benefit from solid demand for its AI and rack-scale total IT solutions and an improved supply of GPUs and other key system components.

Moreover, SMCI’s management highlighted during the Q2 conference call that the demand for AI-inferencing systems and mainstream computing solutions has accelerated. This will support its overall top line in Q3.

Meanwhile, Wall Street expects SMCI to post earnings of $5.83 a share, representing a massive increase from $1.63 in the prior-year quarter. Strong revenue growth and initiatives to lower costs should support SMCI’s earnings. However, the company’s investments to drive market share gains and win new customers will likely pressure margins.

Is SMCI a Good Stock to Buy?

SMCI is benefitting from solid demand, a strong backlog, new customer wins, and improving supply chain conditions. The stock has gained significantly and is up about 716% in one year. Given the significant rally, analysts are cautiously optimistic about SMCI stock.

Overall, SMCI stock has a Moderate Buy consensus rating based on seven Buys, three Holds, and one Sell recommendation. Analysts’ average price target for SMCI stock is $965.64, implying a limited upside potential of 12.62% from current levels. 

Insights from Options Trading Activity

While analysts are cautiously optimistic about SMCI stock, options traders are pricing in a +/- 14.84% move on earnings, which is higher than the previous quarter’s earnings-related move of 3.49%.

The anticipated move is determined by computing the at-the-money straddle of the options closest to the expiration after the earnings announcement.

Learn more about TipRanks’ Options tool here.

Bottom Line

SMCI will likely benefit from strong demand from its new and existing customers for its AI and rack-scale Total IT solutions, higher orders and backlog from top-tier data centers, and improving supply chain conditions. However, SMCI stock has risen significantly over the past year, which could restrict the upside potential, as reflected in analysts’ average price target.


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