Super Micro surges 10% as revenue doubles and margins recover

Super Micro Computer Inc. shares surged more than 10% on Thursday, closing at about $31, as the AI server maker's revenue more than doubled and gross margins rebounded from a steep drop.

"The results reflect strong demand for our complete AI server solutions," Chief Executive Charles Liang said on the company's fiscal third-quarter earnings call, adding that the company can grow faster but also cares about margins.

Revenue reached $10.2 billion in the period ended March 31, more than double the year-earlier figure, though slightly below the $10.24 billion consensus. Earnings per share of 84 cents beat the 62-cent estimate. Gross margin recovered to 9.9% from 6.3% in the prior quarter, which management attributed to selling more complete, ready-to-run systems and lower costs tied to tariffs and shipping.

The stock trades at about 16 times earnings, a discount to rivals Dell Technologies at 33 times and Hewlett Packard Enterprise at 46 times. The low multiple reflects persistent governance concerns: the company's board is conducting an independent review of certain export-control transactions, and total bank debt and convertible notes reached $8.8 billion, nearly double the level six months earlier. Super Micro said it had taken in about $39 billion in AI server orders from more than 20 customers and lined up $7 billion in new equity and equity-linked financing to fund component purchases.

The margin recovery and order book signal that demand for Nvidia-based AI servers remains strong, but the stock's path depends on whether gross margins hold above 9% and the export-control review resolves cleanly. Investors will watch the fiscal fourth-quarter report, expected in August, for evidence that the $39 billion order backlog converts into profitable revenue without further debt expansion.

This article is for informational purposes only and does not constitute investment advice.