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SMCI Soars Post-Earnings: Head Fake, Or Sign of True Recovery?
By Leo Miller. Originally Published: 2/4/2026.
Summary
- 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) has some much‑needed good news. Since hitting its 52-week closing high near $61 in July 2025, Super Micro shares had fallen roughly 50% through the close on Feb. 3, 2026.
After releasing its latest earnings after the close on Feb. 3, shares jumped about 14% on Feb. 4. But do these results signal a durable rebound, or are investors being head‑faked?
Super Micro Crushes Estimates Across the Board
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Super Micro reported astounding growth in its Q2 fiscal 2026 (FY2026). Note that the company’s fiscal year runs ahead of the calendar year.
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.
Sales topped estimates of $10.3 billion, which implied growth of roughly 81%.
The company’s adjusted earnings per share (EPS) also impressed: adjusted EPS was $0.69, up 17% year‑over‑year, versus estimates of $0.49 (which implied a -17% decline).
Additionally, guidance came in well above expectations. For the next quarter SMCI forecasts at least $12.3 billion in sales and adjusted EPS of at least $0.60, versus estimates of $10.2 billion and $0.52. For the full year, Super Micro sees sales hitting $40 billion versus forecasts of $36.4 billion. Despite those headline beats, digging into the underlying details is important to assess the durability of the recovery.
Gross Margin Tanks, But DCBBS Outlook Indicates Rebound
Super Micro is clearly seeing strong demand for systems built around 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% — a 310 basis‑point decline from Q1 2026 and a 550 basis‑point drop from a year ago. The company said its mix is shifting toward large model builders with pricing leverage, which is pressuring gross margin.
This highlights the core issue for Super Micro: it currently behaves more like a price taker than a price setter. Buying expensive chips from NVIDIA and AMD and selling assembled systems to very large customers leaves limited room to negotiate price. Reversing the gross‑margin trend is therefore critical. SMCI did provide a potential source of relief on this front.
Super Micro said its data center building block solutions (DCBBS) are gaining traction. After offering little detail on DCBBS last quarter, the company said the business line contributed about 4% of profit in the first half of FY2026. Super Micro expects DCBBS growth to accelerate and believes it will account for a “double‑digit percentage” of profit by the end of the 2026 calendar year. That matters because Super Micro says DCBBS gross margins are above 20%, well above the company’s overall gross margin. As the division grows, the company’s overall margin profile should improve.
Analysts Eye Solid Upside in SMCI, But Shares and Needham Target Diverge
So far, updated analyst forecasts are limited. The tracked consensus price target for SMCI is around $45.30, implying roughly 34% upside from current levels.
Notably, Needham & Company lowered its price target from $51 to $40 after the results. That target still implies about 18% upside, but the cut is a cautionary signal given the stock’s Feb. 4 move. Needham, however, maintained its Buy rating, which tempers the bearishness of the revision.
Overall, Super Micro’s sustained success depends heavily on DCBBS becoming a much larger part of the business. Early indications are promising, but the company has more to prove — and any setback in DCBBS progress could weaken SMCI’s narrative.
The stock’s rally may continue in the near term, but investors should look for clearer evidence of sustained DCBBS momentum before counting on a long‑term recovery.
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