MW Super Micro's big warning is taking these stocks down with it

By Therese Poletti

Investors are nervous about what Super Micro's profit warning and inventory trends could mean for the entire AI infrastructure market

Super Micro Computer Inc. dropped a small bomb on the artificial-intelligence infrastructure market late Tuesday with its news of a big earnings shortfall for its March quarter, likely related to customer transitions to the newest Nvidia Corp. chips.

But the profit warning also raised questions about overall AI spending.

Shares of Super Micro $(SMCI)$ were down 16% in late morning action Wednesday, and shares of rival AI server providers were falling as well, with Dell Technologies Inc. $(DELL)$ down nearly 5% and Hewlett Packard Enterprise Co. $(HPE)$ off 1.8%. Shares of AI chip makers also fell, with Nvidia Corp. $(NVDA)$ down 2.8%%, Micron Technology Inc. $(MU)$ losing 2.6% and Broadcom Inc. $(AVGO)$ easing 1.9%.

Wall Street is clearly concerned that the companies buying products to build out AI data centers paused some purchases of AI chips and servers while waiting for Nvidia's latest-generation chips, known as Blackwell. They are also likely concerned about the ramifications of the older products, known as Hopper, not completely selling out, as they did in 2024 due to the rush to build out AI data centers.

Also read: Super Micro's stock tanks, and Nvidia could be the reason

"The Super Micro preannouncement is another negative data point on the AI infrastructure market, though we note that some of [Super Micro's] issues appear to company specific, and the company cited 'robust' next-gen products wins," Evercore ISI Securities analysts led by Amit Daryanani wrote in a note to clients.

Super Micro, a leading AI server maker, said that revenue for its March quarter was expected to come in around $4.5 billion to $4.6 billion, about $500 million to $1.5 billion below its previous guidance and well below the FactSet consensus of $5.4 billion.

"We believe order push-outs might be tied to slower enterprise ramps and increased competition with some headwinds from older products," Mizuho Securities analyst Vijay Rakesh said in a note to clients. Rakesh lowered his price target on Super Micro's stock to $34 from $50, while reiterating a neutral rating.

"Increasing competition could pressure share and margins as competitors remain aggressive on pricing," Rakesh added.

While details were scant in Super Micro's announcement late Tuesday, analysts attributed the projected shortfall to the transition to Nvidia's newer Blackwell platform. Super Micro talked about lower earnings per share "due to higher inventory reserves resulting from older generation products." Evercore analysts noted that they believed Super Micro's products were also more "Hopper-skewed."

Hewlett Packard also told analysts in its earnings call in March that it expected to have higher inventories because of the transition to Blackwell.

"AI is entering the 'growing pain stages' with increased budget scrutiny ascompanies seek [return on investment] on significant expenditures," said Jay Goldberg, an analyst with Seaport Research Partners, as he initiated coverage of several semiconductor stocks. He issued a sell rating on Nvidia's stock, in part due to growing scrutiny around AI spending and geopolitical issues.

Super Micro shares are down 19.6% over the past two days and heading for their worst two-day stretch since the period that ended Nov. 1, according to Dow Jones Market Data. That past slide came after the company's auditor, E&Y, resigned over a disagreement with management about the company's financial statements.

-Therese Poletti

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April 30, 2025 12:03 ET (16:03 GMT)

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