Super Micro Computer (SMCI +1.06%) took most of the suspense out of its own earnings report three weeks ago.
In a preliminary update on July 21, the AI server maker said revenue for its fiscal fourth quarter (the period ended June 30) would land near the low end of its $11.0 billion to $12.5 billion guidance. It also said gross margin would come in between 15% and 17%, and that the company received more than $60 billion of new orders during the quarter, pushing its backlog to record levels.
Those three figures would normally be the report. What the update didn't include is a fiscal 2027 outlook. That guide, due when Supermicro reports full results on Tuesday at 5 p.m. ET, is the first number that says what all of those orders convert into.
The market isn't paying up while it waits. Shares trade in the low $30s as of this writing, down about 45% from their 52-week high, at about 9 times expected earnings for the year ahead.
Image source: Getty Images.
Three numbers, already public
The revenue figure mostly settles fiscal 2026. A fourth quarter near $11 billion would be nearly double the $5.8 billion Supermicro reported in the year-ago quarter, and it should bring the full year in around the low end of management's $38.9 billion to $40.4 billion guidance -- up from $22.0 billion in fiscal 2025. The margin figure is the bigger surprise. Management guided for a gross margin of 8.2% to 8.4% in the quarter, and the preliminary range of 15% to 17% is roughly double that, a swing the company attributes primarily to a favorable customer and product mix. And the order figure is the largest of the three by a wide distance: more than $60 billion booked in a single quarter, against a full-year revenue guide of roughly $39 billion.
In other words, Supermicro says it just booked about a year and a half of revenue in three months.
The asterisks
Each of those figures carries a caveat, and the company itself supplies most of them.
The margin is the clearest case. Supermicro's gross margin over the past year has bounced around rather than climbed -- 9.5% in the year-ago quarter, 6.3% in fiscal Q2, then 9.9% in fiscal Q3, followed by that 8.2% to 8.4% guide. A preliminary result of 15% to 17% doesn't extend the trend. It breaks from it. And because management credits customer and product mix, the figure says little about whether the next quarter's mix looks anything like it.
To me, that makes the margin the least trustworthy of the three numbers -- not wrong, just unproven.
The orders, of course, carry their own fine print. In the update's disclosures, Supermicro notes that some of the $60 billion may not constitute firm commitments and remains subject to cancellation or delays. A backlog is contracted demand, not banked revenue.
Then there's the balance sheet. Supermicro used $6.6 billion of cash in operations during its fiscal third quarter, and it finished that period with $1.3 billion of cash against $8.8 billion of bank debt and convertible notes. Growing into a $60 billion order book takes working capital (servers get built and shipped before customers pay), and the cash to fund that build has to come from somewhere.
And one caveat is easy to miss. The tech company's board is conducting an independent review of certain transactions connected to alleged export-control issues, and Supermicro says the outcome could affect its forecasts, including these preliminary results.
NASDAQ: SMCI
Key Data Points
Cheap for a reason?
A growth stock priced at about 9 times forward earnings while revenue grows more than 70% is a market saying it doubts the numbers hold.
For perspective, Supermicro's own price-to-earnings ratio sits near 17. The forward multiple is cheaper because analysts expect earnings to climb sharply from here, and the market is discounting that climb anyway.
Tuesday's guide lands in that context. A fiscal 2027 revenue outlook that implies the backlog converting at anything near the pace it was booked should point well above fiscal 2026's total.
But the margin half matters more. An outlook built on gross margins holding near the mid-teens says the fourth quarter was a reset in the business's economics. One built on single-digit margins says the fourth quarter's margin was a one-off.
The preannounced numbers are strong, and the record so far doesn't show whether they're repeatable. Tuesday's report is where the company puts its own number on that.
