RJ Hamster
SMCI Soars Post-Earnings: Head Fake, Or Sign of True…
Two AI Stocks Getting Quiet Attention(From Darwin)
SMCI Soars Post-Earnings: Head Fake, Or Sign of True Recovery?
Written by Leo Miller on February 4, 2026
Quick Look
- Over approximately six months, shares of Super Micro Computer have lost around half their value.
- However, the stock surged after the company’s latest earnings report on sales growth of more than 100%.
- Gross margin deterioration remains a problematic sticking point, but an emerging business line could shift the trend.
After a precipitous slide, artificial intelligence (AI) server giant Super Micro Computer (NASDAQ: SMCI) just got some much-needed good news. Since hitting its 52-week closing high near $61 back in July of 2025, Super Micro shares had fallen around 50% through the close on Feb. 3, 2026.
However, since releasing its latest earnings after the close on Feb. 3, investors are cheering. Shares rose around 14% on Feb. 4 in reaction. Still, looking forward, do Super Micro’s results signal that the stock can stage a more robust rebound, or could this name be head-faking investors?
What comes after the AI hype phase (Ad)
The AI story is changing. After a year dominated by headlines and valuation expansion, investors are now focused on who is actually monetizing AI at scale. Recent earnings and enterprise spending trends show AI budgets moving from experimentation to deployment. Companies are prioritizing infrastructure, data, and real use cases. The market is rewarding revenue traction, not promises. A new report identifies nine AI companies aligned with this next phase, businesses benefiting from sustained infrastructure spending, enterprise adoption, and recurring AI-driven revenue.Review the full report on where AI dollars are actually flowing now.
Super Micro Crushes Estimates Across the Board
Super Micro reported astounding growth in its Q2 fiscal year 2026 (FY2026). Note that the company’s fiscal year reporting period is ahead of the calendar period.
Sales came in at $12.7 billion, a massive 123% increase versus the prior year. The company’s growth rate has returned to triple-digit levels after revenue declined 15% in Q1 2026.
Super Micro’s sales crushed estimates of $10.3 billion, which called for growth of approximately 81%.
The company’s adjusted earnings per share (EPS) also impressed, coming in at 69 cents. This equated to a growth rate of 17%, compared to estimates of 49 cents and -17% growth.
Additionally, the company’s guidance came in much better than expected. Next quarter, SMCI forecasts sales of at least $12.3 billion and adjusted EPS of at least 60 cents. These handily exceeded estimates of $10.2 billion and 52 cents. Furthermore, Super Micro’s full-year sales estimate is $40 billion, versus forecasts of $36.4 billion. Despite these strong headline figures, diving into the specifics of the company’s results is key to assessing its future.
Gross Margin Tanks, But DCBBS Outlook Indicates Rebound
Super Micro is clearly seeing rabid demand for its products and services, generating huge sales connected to chips from NVIDIA (NASDAQ: NVDA) and Advanced Micro Devices (NASDAQ: AMD). However, that demand has not come without costs. In the quarter, SMCI’s adjusted gross margin fell to 6.4%. This was a 310 basis point drop from Q1 2026, and a 550 basis point drop compared to a year ago. The company said its mix is shifting toward a “large model builder” with pricing leverage, which is pressuring gross margin.
This epitomizes the key issue within Super Micro’s business. At present, the company appears to be a price taker rather than a price setter. Sandwiched between buying high-cost chips from NVIDIA and AMD, and selling assembled systems to extremely large buyers, the company has limited ability to negotiate on price. The company needs to reverse the trend in its gross margin. Notably, SMCI provided a significant source of hope on this front.
Super Micro said that its data center building block solutions (DCBBS) are gaining traction. After providing little detail on DCBBS last quarter, the company said the business line contributed to 4% of profit in the first half of its fiscal 2026. (Note that the company’s fiscal year is ahead of the calendar year.) Super Micro sees DCBBS growth accelerating and believes it will account for a “double-digit percentage” of profit by the end of the 2026 calendar year. This is key, as Supermicro says DCBBS gross margins are above 20%, much higher than the company’s overall gross margin. As this division grows, the company’s overall gross margin profile can improve.
How To Set Up A Family Trust (Ad)
A family trust could help you preserve and pass on your wealth while potentially avoiding public disclosure of trust assets. The benefits include avoiding probate to keep matters private and save your heirs time and legal fees, shielding assets from creditors, lawsuits, and divorce, defining how and when beneficiaries receive their inheritance, and strategic tax planning. With estate tax thresholds set to decrease in 2026, trusts can potentially be used proactively to minimize exposure and lock in current exemptions while they last. However, setting up a trust isn’t one-size-fits-all. Speaking with a financial advisor could be a good first step to finding the trust option that best suits your needs.Get matched with vetted fiduciary financial advisors today
Analysts Eye Solid Upside in SMCI, But Shares and Needham Target Diverge
So far, updated analyst forecasts on Super Micro remain limited. The tracked consensus price target on SMCI is around $45.30. This figure implies a strong upside potential of 34%.
Notably, though, Needham & Company lowered its price target from $51 to $40 after the results. This figure still implies solid upside potential of 18%, but it is not a great sign to see this analyst cut its target, given SMCI’s Feb. 4 price action. Still, Needham maintained its Buy rating on the stock, which limits the bearishness of this signal.
Overall, Super Micro’s sustained success hinges significantly on DCBBS becoming a much larger part of its business. Early results appear promising, but the company still has a lot to prove, and a hiccup in DCBBS progress could damage SMCI’s narrative.
The stock’s rally could continue in the near term, but the company needs to show more concrete evidence of DCBBS success to support its long-term prospects.
Featured Stories
- McDonald’s Earnings Could Cement Its Defensive Appeal
- 7 High-Yield Dividend Stocks You Need to See (From TradingTips)
- Affirm Earnings Beat Highlights Growth and Credit Concerns
- The biggest scam in the history of gold markets is unwinding (From Behind the Markets)
- Symbotic’s Earnings Beat Reignites Upside Talk
- Amazon’s Earnings Miss Was Small, But the Market’s Message Wasn’t
- IREN Earnings Were Ugly—Is a Beautiful Future Already Funded?
Did you find this article helpful?
Thank you for subscribing to Earnings360, a morning newsletter that summarizes quarterly earnings for public companies that trade on U.S. markets.
If you need help with your account, please email our South Dakota based support team at contact@marketbeat.com.
If you no longer wish to receive email from Earnings360, you can unsubscribe.
Copyright 2006-2026 MarketBeat Media, LLC.
345 N Reid Pl., Sixth Floor, Sioux Falls, SD 57103-7078. United States..
Daily Bonus Content: Why I’m doubling down on one market (Click to Opt-In)
