What happened

Shares of server manufacturer Super Micro Computer (SMCI -0.15%) fell 16.7% in August, according to data from S&P Global Market Intelligence.

Super Micro reported fiscal fourth-quarter earnings on Aug. 8, after which the stock sold off about 25%, before recovering with a lot of other tech stocks toward the month's end.

But aside from a somewhat conservative near-term guide, which seemed entirely due to supply constraints in Nvidia AI chips, there really wasn't much wrong with the report.

One insider apparently thought the sell-off was undeserved, and bought over $1 million of the stock on the dip.

So what

Super Micro had already previewed results well above what it had guided for in May, but its fourth-quarter numbers came in even better. Revenue surged 33% to $2.18 billion, and adjusted earnings per share of $3.51 were up 34%, trouncing expectations by $0.60.

But the stock had already more than tripled since its prior report, and apparently investors took its somewhat soft September quarter guidance as an excuse to take profits. For the upcoming quarter, Super Micro only guided for $1.8 billion to $2.2 billion in revenue and $2.75 to $3.50 in adjusted EPS, which would indicate a flattish-to-down sequential growth.

On the other hand, Super Micro also guided for $9.5 billion to $10.5 billion in revenue for the upcoming year ending next June, which would amount to 40% growth over 2023, indicating next quarter's softness is really about supply constraints, and not demand.

And at least one insider thought the post-earnings sell-off to be ill-advised, with board member Fred Chan buying up $1.06 million worth of stock on the open market at around $265 per share in the aftermath.

Now what

Some are still skeptical of Super Micro's recent earnings growth, but management and insiders seem quite confident. With the advent of AI computing requiring customized and energy-efficient solutions, the trend plays right into Super Micro's wheelhouse.

Super Micro operates with a "building block" architecture to construct servers, allowing for quick mass-customization, and the company has been pushing the forefront of energy-efficient servers for the past two decades, long before it was fashionable to do so and financially important to customers.

Management said AI/GPU-related solutions made up 52% of revenue last quarter. That compares with about 10% to 20% noted by other server companies this earnings season, indicating Super Micro's solutions are taking share in the high-growth AI market.