SMCI's preliminary Q1 FY2027 guidance is very positive for the company: revenue $18.5-$19.5 billion, about $4 billion/26.7% above prior limits, and gross margin 12-12.5% vs 10.4-10.8%, signaling stronger AI-server demand and better product mix; the speaker is not excited about the stock price movement itself.
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We also have a Super Micro company, don't we? A company I didn't expect to save the market, and I don't know if it actually did , but it provided an optimistic outlook for the field as a whole.
Regardless, I'm not excited about the stock price movement itself, but rather about the comments we've heard from both sides, SuperMicro and SpaceX, aren't I?
First, SuperMicrosoft significantly raised its forecast for the first quarter of fiscal year 2027. They have provided preliminary results for their next quarter, which they will announce in full on November 3 during the earnings call.
Revenue is expected to range between $18.5 billion and $19.5 billion. This was an optimistic increase of $4 billion at the lower and upper limits, or an update of approximately 26.7% in the forecast.
This is enormous. Now, SuperMicro is selling more servers, or increasing its revenue. This means one thing: there is a huge demand for servers. The other thing, the other thing we saw, is that gross profit margins have also increased.
Gross profit margins are now expected to range between 12 and 12.5, compared to 10.4 to 10.8 previously. Therefore, the company points to stronger demand for AI platforms in terms of revenue, and to the mix of customer products in terms of margins.
That's the positive side of it, isn't it? It's not just a larger volume of lower-margin products, it's more margins and more volume. I think this is extremely useful, and very positive for Super Micro.
For me, this means that if you're increasing gross profit margins , it means there's so much demand for AI servers that people aren't putting a lot of pressure on prices, or engaging in price wars, and that tells me the demand for AI is insane, and the demand for NeoCloud and cloud server providers is insane, and that's generally positive for many of the companies I own.