Super Micro's stock soars after surprise update - with Dell and HPE shares joining the rally

By Emily Bary

Super Micro unexpectedly discloses that its revenue and profitability could be much stronger than originally anticipated

Super Micro is seeing robust AI demand.

While many technology investors were busy digesting SpaceX's earnings Tuesday, Super Micro Computer dropped a surprise business update.

The maker of artificial-intelligence servers posted preliminary results for the latest quarter, topping expectations both in terms of revenue and profitability. The disclosures suggest that AI demand is turbocharging the company's business.

Super Micro's stock (SMCI) was up 14% in Tuesday's extended session.

For the September quarter, Super Micro expects to report revenue of $18.5 billion to $19.5 billion, vastly ahead of its prior forecast that called for revenue of $14.5 billion to $15.5 billion. Analysts tracked by FactSet were expecting $14.9 billion.

The midpoint of Super Micro's new range implies 279% revenue growth from what the company posted a year earlier.

And while profitability has been a sticking point for Super Micro investors in the past, the company signaled a better-than-expected performance on a key metric. Super Micro estimates that its gross margin amounted to 12% to 12.5% for the September quarter versus its prior outlook calling for 10.4% to 10.8%.

Gross margins measure the amount of money a company retains after handling the costs of making its products. While Super Micro is seeing very fast revenue growth, the margin range from Tuesday's update suggests that the company isn't able to sell its servers for dramatically more than it costs to make them - but everything's relative. Evercore ISI analyst Amit Daryanani said a 12% to 12.5% gross margin would be "an impressive feat" for Super Micro as rival Dell Technologies (DELL) has been known to have "historical pricing premium in AI servers."

"We view the update as a positive data point for AI compute demand," Daryanani wrote in a note to clients, referring to computing power and hardware. He wrote that Super Micro's figures bode well for Dell and Hewlett Packard Enterprise (HPE), "with the combination of revenue upside and better-than-expected margins particularly notable."

Dell's stock was up 6% in Tuesday's after-hours trading while HPE's was up 5%. Both stocks suffered heavy losses last week.

Super Micro's "preliminary business update" just touched on a few figures and included limited commentary. A fuller picture is expected when the company delivers its official earnings results on Nov. 3.

Until then, investors will be left with some questions, according to Daryanani. He noted that it's not yet clear how much of Super Micro's business in the September quarter came from major cloud companies versus new-age cloud providers like CoreWeave (CRWV) and SpaceX (SPCX).

See also: Here's what matters most to Tesla investors heading into earnings

-Emily Bary

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10-20-26 1837ET