Supermicro stock jumped nearly 10% in after market trading following the company's impressive Q4 results. According to reports from MarketWatch, the AI server maker reported net sales of $11.12 billion for the quarter ended June 30, nearly double the $5.76 billion a year earlier. The company's gross margin hit 17.5%, up from 9.5% just three months earlier, while net income climbed six-fold to $1.18 billion. Adjusted earnings of $1.70 per share were two and a half times the 68-cent consensus tracked by Zacks. Diluted GAAP EPS rose to $1.62 from $0.31, representing a 423% increase year-over-year. Revenue landed at the low end of the company's own $11 billion to $12.5 billion target, as reported by MarketWatch.
Supermicro expects $14.5 billion to $15.5 billion in September-quarter revenue, over 30% above the June quarter. As reported by MarketWatch, full fiscal 2027 sales should land between $65 billion and $72 billion, with the top end sitting 84% above fiscal 2026's $39.1 billion. CEO Charles Liang explained that the company booked over $60 billion in new orders and added several hundred enterprise customers in a year. The order wave matches heavy spending across AI hardware, where Nvidia's $500 billion deal has raised demand-quality questions. A July preliminary update flagged the order surge and sent the stock up more than 20% in one day, as reported by MarketWatch. However, investors now face questions about what portion of the $60 billion order book constitutes firm commitments and how much may be delayed or cancelled, as the company explicitly cautions about the accounting mechanism.
According to MarketWatch, revenue landed at the low end of the company's own $11 billion to $12.5 billion target. Liang attributed the margin improvement to a richer enterprise customer mix and broader adoption of their optimized Data Center Building Block Solutions® (DCBBS) architecture. The company's inventories nearly tripled to $12.9 billion, and operations consumed $6.8 billion in cash for the year. The results are preliminary and unaudited, with the board reviewing certain transactions tied to export controls. As reported by MarketWatch, thin margins had long been Supermicro's weak spot, with big cloud customers squeezing prices and rivals fighting hard for every AI server deal. The Q4 gross margin preliminary estimate jumped to 15%-17% from an earlier expectation of only 8.2%-8.4% due to favorable customer mix, though this volatility makes customer mix central to the earnings model going forward.
As reported by MarketWatch, Supermicro used $6.6 billion of operating cash during Q3, finished March with approximately $11.1 billion of inventory and $1.3 billion of cash, and saw its cash conversion cycle expand to 106 days. For the first nine months of fiscal 2026, operating cash flow was negative $7.56 billion. Management acknowledged on the prior earnings call that another very rapid step-up in revenue could require additional capital. The company priced 45.45 million new common shares at $27.50 and 75 million depositary shares tied to 7% mandatory convertible preferred stock, with an additional ATM program available. Q4 generated $747 million from operations, with capital expenditures and investments of $25 million. However, full-year operating cash flow dropped to a deficit of $6.81 billion driven by significant inventory and accounts receivable accumulation. Working capital was the primary reason for the cash flow pressure, with $8.88 billion used from inventory and $3.92 billion from accounts receivable.
