Super Micro Computer, Inc. (SMCI) | The Buildout — AI Infrastructure
The Verdict
Super Micro Computer builds rack-scale IT infrastructure for AI and high-performance computing: GPU and CPU servers, storage, networking, liquid cooling, power subsystems, and management software. It sits between silicon platform companies and the data center operators, enterprises, and sovereign AI programs that need integrated AI factories. Under its DCBBS push, the business extends from standalone servers into the physical subsystems around the rack, with time-to-online as the stated competitive aim.
| Market Cap | — |
| Revenue (TTM) | $33.7B |
| Revenue Growth | +56.2% |
| EBITDA Margin (TTM) | 4.7% |
| Net Debt | $5.5B |
| Earnings Beats | 3 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- Q4 new orders totaled more than 1.5x FY2026 revenue, driving a record backlog entering FY2027.
- Management's FY2027 revenue target of $65 billion–$72 billion implies roughly +66% to +84% from FY2026 revenue, by arithmetic on the disclosed $39.1 billion base.
- FY2026 customer diversification improved to nine customers above $1 billion, up from four in FY2025; the largest was 28% of revenue.
- Q4 enterprise/channel revenue reached $5.6 billion, 50% of revenue and up 172% y/y; management frames CPU, storage, IoT, and enterprise as higher-margin.
- Manufacturing capacity is on track to exceed 6,000 racks per month, including more than 3,000 direct liquid-cooled racks per month.
What We’re Watching
- Board investigation update remains pending; on the Q4 call management said only that an update would come shortly.
- Q4 non-GAAP gross margin of 17.6% was not treated as run-rate; Q1 FY2027 guidance is 10.4%–10.8%.
- Customer site readiness has now delayed revenue in Q3 and Q4 FY2026, pushing Q4 to the low end of its $11.0B–$12.5B guidance.
- Cash conversion cycle reached 149 days, inventory hit $12.9B, and FY2026 operating cash flow was negative $6.8B.
The demand side of the thesis is strengthening on the disclosed order and backlog evidence, while the execution side is still unproven. Management is deliberately shifting toward higher-margin enterprise and DCBBS revenue, but two straight quarters of customer-readiness delays and a pending board update qualify the story. The open question is whether the record backlog converts on schedule without further site-readiness resets.
Earnings
Reported August 11, 2026, Q4 FY2026 revenue was $11.1 billion, up 93% y/y and 9% q/q, near the low end of $11.0B–$12.5B guidance. Non-GAAP gross margin was 17.6%, up from 10.1% in Q3 and far above the 8.2%–8.4% guide; non-GAAP diluted EPS was $1.70 versus guidance of $0.65–$0.79. The standout disclosure was more than $60 billion in new orders, driving record backlog entering FY2027.
| Metric | Q3 FY2026 | Q2 FY2026 | Q3 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $10.2B | $12.7B | $4.6B | +122.7% |
| Gross margin | 9.9% | 6.3% | 9.6% | +30bps |
| EBITDA | $649M | $497M | $162M | +300.7% |
| EPS | $0.72 | $0.59 | $0.17 | +310.1% |
| AI solutions share of revenue | ~60% | >80% | n/a | — |
| New orders | >$60B | n/a | n/a | — |
While Q4 revenue came in at $11.1 billion due to some short-term customer delays in power shortage, cooling, and networking, we know this is purely a timing story.— Charles Liang, Founder and CEO, August 11, 2026
Management tone: Management shifted from a growth-first tone toward explicit balance between revenue and profitability; Charles Liang said the business has to be healthy and margin had to meet minimum financial demand. The CFO called part of the Q4 gross margin benefit nonrecurring, said the company did not book a tariff rebate, and declined to add detail on the board investigation beyond that an update would come shortly.
Management Guidance
Management initiated Q1 FY2027 guidance of $14.5B–$15.5B net sales, non-GAAP gross margin of 10.4%–10.8%, non-GAAP diluted EPS of $1.01–$1.10, GAAP diluted EPS of $0.89–$0.98, and capex of $50M–$60M. It also set a FY2027 net sales target of $65B–$72B. The company did not provide a full-year gross margin trajectory; Q1 assumes a non-GAAP tax rate of 20.5% and 761 million diluted shares.
Trajectory
Reported revenue has been lumpy: $12.7 billion in Q2 FY2026, $10.2 billion in Q3, and $11.1 billion in Q4. Customer power, cooling, and networking readiness, not factory output, has been the gating constraint in the two most recent quarters. Non-GAAP gross margin swung from 10.1% in Q3 to 17.6% in Q4, but management attributed roughly 75% of the sequential improvement to favorable mix including contract deferrals and guided Q1 FY2027 at 10.4%–10.8%.
The Model
The model projects FY+1 revenue of $55,000M and EBITDA of $3,520M, a 6.4% margin, and FY+2 revenue of $69,000M and EBITDA of $5,106M, a 7.4% margin. Near-term anchors are the Q1 FY2027 guide of $14.5B–$15.5B and the record backlog; FY+2 is driven by conversion of the >$60B Q4 order intake and the mix shift toward enterprise, DCBBS software, and services.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $22.0B | $70.0B | $88.0B |
| YoY Growth | — | +218.6% | +25.7% |
| EBITDA | $1.3B | $5.6B | $7.6B |
| EBITDA Margin | 6.0% | 8.0% | 8.6% |
Projections are the median of 5 independent model runs. The model’s revenue sits 46.3% above analyst consensus.
Management initiated Q1 FY2027 guidance of $14.5B–$15.5B net sales, non-GAAP gross margin of 10.4%–10.8%, non-GAAP diluted EPS of $1.01–$1.10, GAAP diluted EPS of $0.89–$0.98, and capex of $50M–$60M. It also set a FY2027 net sales target of $65B–$72B. The company did not provide a full-year gross margin trajectory; Q1 assumes a non-GAAP tax rate of 20.5% and 761 million diluted shares.
What Could Go Right — and Wrong
- Customer sites reach power, cooling, and networking readiness on schedule, allowing delayed Q3 and Q4 revenue to be recognized in subsequent quarters.
- The >$60B Q4 order book converts to revenue with fewer deferrals, supporting management's FY2027 target.
- Enterprise/channel revenue remains near 50% of revenue or grows, lifting mix toward CPU, storage, IoT, and enterprise applications described as higher-margin.
- DCBBS profit contribution reaches the roughly 20% level Charles Liang said should be not far away.
- First-to-market NVIDIA Vera Rubin systems and AMD Helios platforms translate into visible shipments before competitors.
- Customer site readiness delays continue for another quarter, pushing the promised recapture further out.
- Q4 gross margin reverts sharply; Q1 FY2027 guidance is 10.4%–10.8%, and management called part of the Q4 benefit nonrecurring.
- Supplier concentration bites: Supplier A was 64.4% of FY2025 purchases, and Ablecom and Compuware are related-party manufacturing coordination partners.
- Cash conversion cycle remains near 149 days, inventory stays elevated, and FY2026 operating cash flow was negative $6.8B.
- Board investigation or export-control developments produce new compliance, customer, or financing consequences.
Looking Ahead
The next 12 months are framed by the effort to convert the record Q4 order book into revenue, with management targeting FY2027 revenue of $65B–$72B and Q1 FY2027 revenue of $14.5B–$15.5B. Capacity is scaling beyond 6,000 racks per month, and named projects announced include Verda, Odine, and the Gorilla/Yotta India deployment.
- ShortlyBoard investigation update — Independent board update into the March 2026 indictment allegations.
- Q1 FY2027Q1 FY2027 results — Tests deferred revenue recapture and order conversion into revenue.
- FY2027FY2027 revenue target — FY2027 revenue target tested through quarterly FY2027 prints.
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $18.8B | $22.0B | $33.7B | +17.1% |
| Gross Margin | 12.5% | 11.0% | 8.4% | 155bps |
| EBITDA | $1.3B | $1.3B | $5.8B | +0.4% |
| EBITDA Margin | 7.0% | 6.0% | 4.7% | 99bps |
| Net Income | $1.2B | $1.0B | $1.2B | -10.8% |
| Free Cash Flow | −$2.6B | $1.5B | −$8.5B | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)8.4%
- EBITDA Margin (TTM)4.7%
- Net Margin (TTM)3.7%
- ROIC9.2%
- FCF Conversion-429.3%
- SBC / Revenue0.5%
The Company
Super Micro Computer builds rack-scale IT infrastructure for AI and high-performance computing, including GPU and CPU servers, blade and multi-node systems, storage, networking, liquid cooling, and management software. The FY2025 10-K describes it as a provider of total IT solutions from enterprise and cloud to the intelligent edge, and management is now pushing beyond servers toward Data Center Building Block Solutions: integrated compute, cooling, power, software, and services.
Manufacturing is global and largely owned in key sites: about 1.6 million square feet in San Jose, plus facilities in Taiwan, Malaysia, and the Netherlands, and a new 32-acre Silicon Valley DCBBS campus intended to bring the U.S. footprint to nearly 4 million square feet. The company uses related-party manufacturers Ablecom and Compuware for contract design and manufacturing coordination support, and runs a multi-silicon strategy across NVIDIA, AMD, Intel, and Arm.
Business Segments
Competitive Landscape
The FY2025 10-K lists global technology vendors Cisco, Dell, Hewlett-Packard Enterprise, and Lenovo, and ODMs Foxconn, Quanta Computer, and Wiwynn as competitors. Management says SMCI covers both OEM and ODM models and positions time-to-online as the competitive aim. A code-computed criticality assessment finds the AI buildout would not slow materially if SMCI could not deliver, because multiple alternative server assemblers exist.
- CiscoNamed in 10-K among global technology vendors; not discussed in detail.
- DellNamed in 10-K among global technology vendors; not discussed in detail.
- Hewlett-Packard EnterpriseNamed in 10-K among global technology vendors; not discussed in detail.
- LenovoNamed in 10-K among global technology vendors; not discussed in detail.
- Quanta ComputerNamed in 10-K as ODM competitor; WhiteFiber's first GB200 NVL72 racks came from Quanta Cloud Technology, not SMCI.
Supply Chain
SMCI sits between silicon platform suppliers and data center operators, integrating GPUs, CPUs, cooling, networking, and power into rack-scale systems. The chain is concentrated: an unnamed supplier was 64.4% of FY2025 purchases.
More on SMCI: Earnings recap