(Reuters) -Artificial intelligence server maker Super Micro Computer on Tuesday reported lower-than-expected third-quarter revenue, hurt by shortages of some key components and questions over the profitability of a new line of servers.
Shares of Super Micro, which have more than tripled in value so far this year, were down 10% in pre-trading on Wednesday.
The San Jose, California-based company, which makes powerful AI servers with chips from Nvidia, Advanced Micro Devices and others, reported better-than-expected fourth-quarter revenue as it expects steady demand.
But on an earnings call, analysts peppered company leaders with questions about spending to support the transition to a new generation of Nvidia chips that require liquid cooling and whether those new servers, which Will hit the market later this year, their prices will be quite high. To increase the profit margin of Super Micro.
The AI server maker was added to the S&P 500 index last month.
To gain market share in a competitive industry, Super Micro is relying on in-house liquid cooling technology for its servers.
CEO Charles Liang told analysts the company paid a premium to secure supply to quickly build those liquid-cooled servers over the next few quarters, but said end customers would prefer them than older, air-cooled ones. Will pay only the “very minimum premium”. Server.
Inventory stood at $4.12 billion at the end of the March quarter, up from $1.45 billion in the fiscal year ending June 30, 2023.
“It does impact our cash flow, but you know, it doesn’t matter because we need that inventory for Q4 shipment,” said Chief Financial Officer David Weigand.
Super Micro aims to remain in the 14% to 17% gross margin range over the long term, he said, despite some analysts projecting margins below that range in the company’s quarterly forecast.
The company expects fourth-quarter revenue of between $5.1 billion and $5.5 billion, while analysts’ average estimate is $4.89 billion, according to LSEG data.
“If we were not limited by the shortage of some key components, we could supply more,” Liang said.
The company raised its annual sales forecast to $14.7 billion to $15.1 billion from $14.3 billion to $14.7 billion previously reported.
Super Micro reported first-quarter adjusted profit of $6.65 per share, compared with analysts’ expectations of $5.78 per share.
Revenue for the quarter ended March 31 came in at $3.85 billion, compared with estimates of $3.95 billion, according to LSEG data.
Gross margin for the three-month period was 15.5%, down from 17.6% a year earlier, in line with analysts’ expectations.
(Reporting by Akash Sriram in Bengaluru and Stephen Nellis in San Francisco; Editing by Taseem Zahid and Jamie Freed)
