The past year has seen an extraordinary run for high-end server and storage solution specialist Super Micro Computer (SMCI -5.04%), also known as Supermicro. Prior to the company's latest quarterly report, which it released after the market close on Tuesday, the stock had gained more than 700% over the past year, driven higher by accelerating demand for artificial intelligence (AI) systems and the hardware to power them.

However, gravity may have finally caught up with Supermicro. Despite robust results and increased guidance, investors engaged in a round of profit-taking Wednesday morning that drove the stock down by as much as 18.5%. As of 11:50 a.m. ET, the stock was still down by 15.8%.

Sometimes, fabulous isn't good enough

In its fiscal 2024 third quarter, which ended March 31, Supermicro's revenues surged 200% year over year to $3.85 billion. Expanding profit margins sent even more to the bottom line: Adjusted earnings per share (EPS) soared by 308% to $6.65. Analysts' consensus estimates were calling for revenue of $3.95 billion and EPS of $5.78, so while profits were stronger than expected, sales were a little shy of expectations.

During the earnings call, CEO Charles Ling noted that Supermicro continues to "face some supply chain challenges," particularly involving components for its direct liquid-cooled servers. These servers are in high demand from cloud service providers and data center operators as they scramble to meet the accelerating demand for hardware capable of powering generative AI. These shortages likely contributed to slightly lower-than-expected revenue growth. That said, he expects the bottlenecks to ease in the coming quarters.

Ling also reminded investors that this was "another record quarter" and said, "We expect to continue gaining market share."

Increased guidance

In the wake of the company's rapid growth recently, management boosted the full-year revenue outlook to a range of $14.7 billion to $15.1 billion. Previously it had guided for a range of $14.3 billion to $14.7 billion. If it hits the midpoint of the revised forecast, Supermicro will deliver year-over-year top-line growth of 109%.

Given Supermicro's triple-digit percentage growth and robust guidance, the stock remains attractively priced, trading at roughly 2 times expected forward sales. However, this AI transition is still in its early stages, and the road ahead is likely to be long and volatile. Investors should ignore the noise and buy Supermicro for the long term.