Super Micro Computer stock (NASDAQ: SMCI) surged 18% after the AI-server maker delivered a profitability surprise, but Goldman Sachs remains firmly unconvinced that one favourable quarter has repaired the business model.
Super Micro expects fiscal fourth-quarter gross margins of 15% to 17%, versus earlier guidance of 8.2% to 8.4%.
It also received more than $60 billion of new orders, lifting backlog sharply.
The update challenged fears that strong AI demand was being won at the expense of profitability.
Goldman analyst Katherine Murphy nevertheless retained her Sell rating, arguing that shipment timing, customer concentration and limited diversification cloud the outlook.
A margin shock overshadowed softer revenue
Super Micro expects quarterly revenue near the bottom of its earlier $11 billion to $12.5 billion range.
That would normally disappoint investors. Instead, the market concentrated on margins and the order book.
The company attributed the improvement to a more favourable customer and product mix. That matters because demand has not been Super Micro’s principal weakness.
The concern has been how little profit it earns when supplying expensive AI systems to customers with negotiating power.
The $60 billion order total suggests demand for servers and data-centre systems remains robust.
However, the company said those orders would be delivered over future quarters and warned that some may face cancellation or delays.
The preliminary figures are unaudited and could change before full results on August 11.
Goldman sees progress, but questions durability
Murphy acknowledged that the orders were encouraging amid debate over Super Micro’s ability to win enterprise business, according to TipRanks.
She said the backlog indicated the company was “broadening out its customer base”, a shift that “should help gross margins” over time.
However, Murphy noted that a margin-dilutive transaction expected during the quarter had been delayed.
Its absence reduced revenue but improved the customer and product mix, contributing to the strong margin forecast.
That explains Goldman’s refusal to turn bullish.
The bank sees part of the improvement as a timing benefit rather than proof that the economics of selling AI hardware have permanently changed.
Concentration remains another concern as one data-centre customer accounted for about 27% of quarterly sales and nearly 39% of year-to-date revenue in Super Micro’s latest filing.
Goldman Sachs retained its Sell rating, $30 target and argued that Super Micro remains a price-taker between powerful suppliers and concentrated customers in the AI market.
The backlog now faces a conversion test
The bullish case requires Super Micro to convert its backlog into revenue while protecting double-digit margins.
A broader mix of enterprise and sovereign-AI customers could improve bargaining power and reduce dependence on large neocloud operators.
The bearish scenario is that delayed, lower-margin deals return in subsequent quarters and pull profitability down again.
Large orders can also require upfront spending on GPUs, memory and networking equipment before customers pay, pressuring working capital.
Citi analyst Asiya Merchant cited “ongoing variability tied to customer concentration, revenue timing and margin ramp volatility” while maintaining a cautious view.
She also flagged dilution as Super Micro raises capital to fund its order book.
KeyBanc analyst Brandon Nispel offered a standard after the company’s previous results.
Investors needed to see “several quarters of both margins and revenue execution” before becoming more comfortable, he wrote in comments reported by Barron’s.
The post SMCI stock surges 18%: why is Goldman Sachs still refusing to turn bullish? appeared first on Invezz
