While the AI bubble debate heats up, Super Micro, which builds and sells servers, put out numbers that far exceeded expectations. The preliminary FY2027 first-quarter revenue outlook it released after the close on October 20 is $18.5 billion to $19.5 billion.
Compared with the previous outlook of $14.5 billion to $15.5 billion, the outlook range itself moved up a whole level.
Calculated at the midpoint, the revenue outlook rose 26.7%, from $15.0 billion to $19.0 billion. It's also 24.8% higher than the $15.23 billion average analyst estimate from LSEG cited by Reuters.
On top of that, the actual revenue for the same quarter a year earlier, FY2026's first quarter, was about $5.018 billion. This preliminary outlook's midpoint is 3.8 times that figure.
If the preliminary figure is confirmed as the final result, revenue growth versus the same quarter a year earlier would reach about 279%.
Beating Both the Company's Outlook and Market Expectations by a Wide Margin
✦ Revenue Outlook Comparison
FY2027 first quarter, in $ billions
SMCI cited rising demand for AI platforms as the reason for raising the revenue outlook.
There's also a market forecast that giant tech companies like Microsoft, Google, Amazon, and Meta are expected to spend more than $700 billion on AI infrastructure this year.
It's a signal that this money isn't staying with GPUs and data centers but is actually flowing into the revenue of companies that supply servers and rack systems.
✦ Gross Margin Outlook
Midpoint up 1.65 percentage points
It isn't only the revenue outlook that went up. The gross margin outlook rose too. It went from the previous 10.4% to 10.8% up to 12.0% to 12.5%, and comparing midpoints, it improved by 1.65 percentage points, from 10.60% to 12.25%.
The company said changes in customer and product mix helped improve the margin.
✦ Calculated Gross Profit
Simple math with midpoints, not a company outlook
Multiplying these two midpoints gives a calculated gross profit that grows from about $1.59 billion to about $2.33 billion. That's an increase of about 46%.
This isn't a profit outlook the company announced but a calculation multiplying the midpoints of the revenue and margin ranges, but anyway, it's clear that gross profit is expected to be much larger than originally expected.
AI Server Demand Is This Strong, So Why Did the Market Get Scared?
The timing of this announcement is interesting too. A few days earlier, investors had started doubting whether companies that had rapidly expanded AI data centers could recover that investment with enough cash.
A representative example is the AI cloud company CoreWeave. As CoreWeave's stock and bonds came under pressure together, the risk of a business model in which you borrow huge sums to secure GPUs and data centers first and earn profits later stood out.
If data center completion or operation is delayed, money goes in first while revenue gets pushed back.
✦ SMCI Regular-Session Closes
Sep 30 to Oct 20, Nasdaq regular session close (USD)
Super Micro's stock was also weak until the preliminary announcement. It fell about 20.9% over 15 trading days, from a close of $41.07 on September 30 to $32.47 on October 20.
You can't explain this decline with AI bubble worries alone, but it's certain investor sentiment wasn't comfortable before the announcement.
But when the revenue outlook was released after the October 20 regular session closed, the stock rose 11.3% in after-hours trading as reported by Reuters. Dell and HPE rose 3.5% to 4.9% and Nvidia 1.5% at the same time.
One company's earnings outlook spread to server makers and AI chip companies.
✦ Key Dates Around the Announcement
From October 15 to the scheduled November 3 results
This SMCI earnings improvement isn't the end of the AI bubble debate. A signal that server orders are strong and evidence that customers running AI services are recovering what they invested are different stories.
Even if Super Micro delivers servers and books revenue, its customers have to generate enough revenue and cash from those servers to keep their business models going over the long term.
Stock prices reflect expectations of the future, and even if servers sell well now, if investors expect them not to sell in the long run, they might dump the stock without regret.
As Revenue Grows, Is Cash Piling Up Too?
Super Micro's FY2026 annual results show this gap well. Annual revenue grew 77.8% from about $22 billion in 2025 to about $39.1 billion in 2026, and net income also rose from about $1.05 billion to $2.23 billion.
But the annual gross margin actually fell by 0.3 percentage points, from 11.1% to 10.8%.
✦ FY2026 Key Figures
Revenue grew, but cash flow moved the other way
A hardware business can run short of cash even as sales grow. To sell servers, you have to secure expensive parts like GPUs in advance, and sometimes you only get paid after delivering the product.
Looking at Super Micro's FY2026 (July 1, 2025 to June 30, 2026) financial statements, this problem shows up in the numbers.
Inventory grew from about $4.7 billion at the end of June 2025 to about $12.9 billion at the end of June 2026, and revenue not yet collected from customers also rose from about $2.2 billion to $6.1 billion.
Money went into buying parts, but it takes time for inventory to sell and for receivables to come in as cash. Because of this, the company used more than $6.8 billion in cash in operating activities over the year.
It made up the shortfall with bank loans, credit lines, and new share issuance.
Raising money from outside lets you keep the business going for now, but debt comes with repayment burdens, and issuing new shares lowers existing shareholders' ownership percentage. What to watch next isn't only how much revenue grows.
You have to see whether the stockpiled servers and parts turn into actual sales and whether the money owed by customers comes back as cash.
In the last quarter of FY2026 (the second quarter of 2026), Super Micro recorded revenue of $11.1 billion and a gross margin of 17.5%. It means that out of every $100 of revenue, $17.5 was left after subtracting product costs.
But the gross margin for the whole year was only 10.8%. The last quarter's profitability was far better than the annual average.
This quarter's preliminary gross margin outlook of 12.0% to 12.5% is also higher than last year's annual average but lower than the previous quarter's 17.5%.
There's doubt about whether its accounting is transparent, too. In its annual report on August 28, 2025, Super Micro disclosed that "there are several weaknesses in the internal controls that record and verify financial information."
It then worked on improvements and resolved several issues, but in the new annual report filed on August 31, 2026, it said one issue still remains.
It said it hadn't managed in a consistent way who can access some of the IT systems that process accounting data, and whether access rights are properly checked. The company reported that this issue was still unresolved as of June 30, 2026.
Of course, this alone doesn't mean there was financial statement manipulation, but it's true that something feels a bit fishy. They appointed a new CFO on October 15, so let's hope the accounting problems get better.
So Is It an AI Boom or a Bubble?
This announcement is a strong signal that AI infrastructure demand is turning into actual server revenue. Some people claim that AI investment is all illusion and that AI is churning out garbage, but it looks certain that's not true.
It's not only SMCI; AI infrastructure companies are posting amazing results one after another. I think it's different from past bubbles, when stock prices soared enormously on expectations of the future alone, without proper earnings. Let's wait and see.
Let's check whether SMCI's preliminary revenue is confirmed as final in the official results on November 3, and whether it turned its piled-up inventory and receivables into cash well.
This isn't investment advice. You know that, right? Let's each protect our own hard-earned money.
That's all for this post. See you next time.
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🌐 Korean version: 슈퍼마이크로(SMCI) 잠정매출 서프라이즈! AI 버블 경고 속에서 AI 붐을 외치다
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