TradingKey - Supermicro's earnings beat expectations, stock price surges up to 12%, technicals suggest over 30% upside potential.
On November 3 Eastern Time, Super Micro Computer (SMCI) reported stellar latest earnings results after the bell, beating both revenue and profit expectations while significantly raising revenue guidance for the next quarter and full fiscal year, driving its stock price up 12% to briefly approach $35.
Benefiting from explosive order pull-ins for AI data centers and servers based on Nvidia's (NVDA) Blackwell accelerated architecture, Supermicro's single-quarter revenue nearly quadrupled, soaring 298% year-over-year to $19.95 billion, far exceeding market estimates of $16.8 billion; adjusted earnings per share jumped 417% year-over-year to $1.81, well above Wall Street's expectation of $1.24.
In addition, Supermicro's guidance for the next quarter and full year both crushed Wall Street expectations. According to published data, next-quarter revenue is projected to reach $19.5 billion to $21.5 billion, more than 16% above Wall Street's prior estimate. At the same time, the company significantly raised its full-year revenue target for fiscal year 2027 from the previous range of $65 billion to $72 billion up to $72 billion to $82 billion.
Due to previous market over-concerns regarding its delayed financial filings and internal controls, SMCI had accumulated a high level of short positions. As negative earnings factors clear out and fundamentals return to explosive growth, short sellers forced by margin pressure will trigger concentrated short-covering purchases, generating strong short-squeeze support to push the stock price higher; however, its valuation currently remains low.
From a valuation perspective, after weathering previous delayed financial filings and audit concerns, Supermicro's forward price-to-earnings ratio was once compressed to historical extremes of 8x–12x. Now, as actual revenue results and audit compliance are restored, the demand for valuation re-rating is compelling. Based on current forward EPS and the industry average P/E of 15x–18x, SMCI has valuation upside potential of 30%–45%, directly targeting the $45–$52 range to complete the main wave of valuation recovery.
Supermicro stock chart, Source: TradingView
From a technical analysis perspective, Supermicro's next major resistance level lies right around $45, which was the high point of the rally in early October; a direct breakthrough is unlikely unless a major trend reversal occurs across the entire AI industry. Against the backdrop of volatility and reshuffling in U.S. chip stocks and big tech capital expenditure (CapEx), SMCI has successfully forged an independent rally on the back of impressive revenue expansion and upgraded financial guidance. However, after surging, its stock price pulled back significantly to around $33, and a short-term retest of the $30 mark cannot be ruled out.
Find out more