Super Micro Computer (SMCI)·Q2 2026 Earnings Summary

Supermicro Crushes Estimates with $12.7B Revenue, Stock Jumps 7% After Hours

February 3, 2026 · by Fintool AI Agent

Super Micro Computer delivered a blowout quarter, reporting revenue of $12.7 billion—a stunning 22.6% beat versus Wall Street's $10.3 billion consensus . This marks Supermicro's return to beat territory after three consecutive quarterly misses, driven by surging AI server demand. Shares rallied 7.3% in after-hours trading to $31.83 .

Did Supermicro Beat Earnings?

Supermicro obliterated expectations across both revenue and earnings:

This quarter snaps a troubling trend. Heading into results, SMCI had missed earnings estimates in three consecutive quarters, including a -23.91% surprise in Q1 FY2026 .

The magnitude of the beat is striking—revenue came in $2.3 billion above the high end of analyst estimates ($11B), suggesting analysts significantly underestimated AI infrastructure demand.

Customer Concentration: The 63% Elephant

A critical disclosure from the Q&A: one customer represented approximately 63% of Q2 revenue . This is an extraordinary level of concentration—that single customer drove ~$8 billion in revenue this quarter.

Management confirmed this is a repeat customer ("Super Micro does most of its business with repeat customers") , though they declined to specify which 10-K/10-Q disclosed customer this represents. The revenue mix shift is stark:

CEO Charles Liang acknowledged this mix shift creates "pricing leverage" pressure on margins , but emphasized the company is "aggressively growing enterprise mid-size" customers to diversify .

Geographic concentration is also notable: US represented 86% of Q2 revenue, up dramatically from prior periods. Asia (9%), Europe (3%), and ROW (2%) were much smaller contributors .

What Changed From Last Quarter?

The sequential growth is nothing short of extraordinary:

Revenue more than doubled sequentially—a $7.7B swing in a single quarter. This 153% sequential jump is unprecedented for Supermicro and reflects the company ramping deliveries on large AI infrastructure contracts.

Year-Over-Year Comparison

The Margin Trade-Off

The elephant in the room: gross margin compressed to 6.3%, down from 11.8% a year ago . This is the lowest gross margin in Supermicro's recent history.

Management is clearly prioritizing market share and scale over margins. The non-GAAP gross margin of 6.4% tells the same story. Goldman Sachs analyst Mike Ng has flagged "limited near-term visibility for margin improvements due to large, dilutive contracts" .

However, the volume surge more than compensated—operating income of $474 million was 29% above Q2 FY25's $369 million .

Adjusted EBITDA came in at $628.6 million (5.0% of net sales), up 32% from $475.4 million (8.4% of net sales) in the prior year quarter . The EBITDA margin compression mirrors the gross margin story, but absolute dollar growth remains strong.

The Margin Recovery Path: DCBBS

Management outlined a clear path to margin improvement centered on DCBBS (Data Center Building Block Solutions):

When asked directly about DCBBS margins, CEO Charles Liang confirmed: "Gross margin, net margin are much higher for DCBBS because it's so unique... more than 20%" . This compares favorably to the 6.4% non-GAAP gross margin on the overall business.

For Q3, management guided gross margins to improve 30 basis points versus Q2 levels , driven by:

1. Maturing GB300 production (reducing expedite costs)
2. Growing DCBBS contribution
3. Improving tariff impacts
4. Economies of scale

What Did Management Guide?

Supermicro provided strong forward guidance:

Key observations:

1. Q3 revenue guidance of $12.3B+ implies demand remains elevated—only a modest 3% sequential decline despite typical seasonal patterns
2. FY26 revenue of $40B+ represents a significant raise from prior expectations (~$36B consensus)
3. EPS guidance assumes ~19.6% GAAP tax rate and 684M fully diluted shares

The guidance language of "at least" suggests potential upside, consistent with management's commentary about "strong customer engagements" .

How Did the Stock React?

SMCI closed the regular session at $29.67, down 1.1% . The stock had dropped 7.5% over the five days heading into earnings amid broad market caution.

After-hours reaction: +7.3% to $31.83, reflecting the magnitude of the beat.

The stock remains well below its 52-week high, reflecting ongoing concerns about the DOJ accounting investigation and margin compression. Options markets had implied a 12% move heading into results .

What Did Management Say?

CEO Charles Liang struck an optimistic tone:

"With our leading AI server and storage technology foundation, strong customer engagements, and expanding global manufacturing footprint, we are scaling rapidly to support large AI and enterprise deployments while continuing to strengthen our operational and financial execution."

Key strategic themes:

• DCBBS (Data Center Building Block Solutions): Enables customers to "scale faster, greener, and at lower cost" . The product lineup now includes DLC (direct liquid cooling), L2A (liquid-to-air), chilled doors, power shelves, BBU, switches, and software, with new solution releases planned for 2026
• Product Portfolio: Delivering high-volume NVIDIA GB300 NVL72, HGX B300, RTX6000Pro, and AMD MI350/355 worldwide
• Next-Gen Pipeline: Already receiving customer commitments for upcoming NVIDIA Vera Rubin and AMD Helios platforms, expected in H2 2026 . Liang noted: "We have a lot of highly interested customers. Some already engaged"
• New Federal Business Unit: Supermicro is establishing a dedicated Federal Business Unit to address government and defense opportunities—a key new vertical market
• Global manufacturing expansion: US, Taiwan, and Netherlands facilities, with focus on streamlining operations, logistics, and automation for business efficiency
• Total IT Solution Provider: Positioning across AI, Cloud, Storage, and 5G/Edge

Balance Sheet & Cash Flow

Working Capital Efficiency Improved Dramatically

The cash conversion cycle improved from 123 days in Q1 to just 54 days in Q2 —a remarkable 69-day improvement:

New Financing Capacity

To fund continued growth, Supermicro significantly expanded access to working capital:

• $2.0B secured revolving credit facility in the US (December)
• $1.8B secured revolving facility in Taiwan (January)
• Accounts receivable factoring facility also established

CFO David Weigand noted: "We have access to over $5 billion of additional capital... for the current outlook, we have adequate capital to meet our needs" .

Cash flow used in operations for Q2 FY26 was $24 million , as working capital swings absorbed cash. Capital expenditures totaled $21 million , with Q3 CapEx expected at $70-90 million .

Q&A Highlights

Key exchanges from the earnings call:

On supply constraints and guidance conservatism (Asiya Merchant, Citi):

Q: "Is the $40B guide a constraining number given supply constraints? Could it be greater?" A: "You are right. We already considered component surprise keeping growing... that's why we try to be conservative kind of commit to $40 billion. Even if the shortage situation improve quickly, for sure our revenue will be more than that." — Charles Liang

On margin recovery timing (Ananda Baruah, Loop Capital):

Q: "Do you still think December quarter was the low watermark for gross margin?" A: "Yes... GB300 entry was a little bit new to us, so lots of expedite transportation costs. Now product is getting mature, so those costs will be dramatically reduced. And tariff impact also improving." — Charles Liang

On DLC/cooling technology leadership (Nehal Chokshi, Northland):

Q: "Will Supermicro continue bringing efficiency advantages one generation faster than NVIDIA reference?" A: "Before we are able to make our total solution one generation or six months earlier than others... in the future, I believe we'll still be able to bring a total solution to market earlier, at least three months or four months earlier." — Charles Liang

On customer diversification (Quinn Bolton, Needham):

Q: "Do you expect revenue to diversify from the 63% customer?" A: "We are very happy that now we have many more large-scale customers. The customer is more diversified, and overall revenue will grow quickly." — Charles Liang

Risks & Concerns

1. DOJ Investigation: The Justice Department continues to scrutinize SMCI's accounting practices, spotlighted by Hindenburg Research's short report
2. Margin Compression: Gross margins at 6.3% are at historic lows; sustainability of current revenue levels without further margin erosion is uncertain
3. Customer Concentration: Large AI contracts could mean revenue concentration risk
4. Working Capital: Receivables ballooned to $11B—any collection issues could pressure liquidity
5. Competition: Rising competition from OEMs and ODMs in the AI server market

Analyst Sentiment

Heading into results, analysts were cautious:

• 4 Hold, 1 Buy, 1 Sell ratings
• Citi price target: $39 (Hold)
• Goldman Sachs: $26 (Sell)
• Northland Securities: $63 (Buy, Street high)

The magnitude of this beat may force upward estimate revisions and potential rating upgrades.

Key Takeaways

1. Blowout quarter: Revenue beat by 22.6%, EPS beat by 40.8%—breaking a three-quarter miss streak
2. Explosive growth: Revenue +153% QoQ and +123% YoY, driven by AI infrastructure demand
3. Customer concentration risk: One customer was 63% of Q2 revenue—extraordinary single-customer dependency
4. Margin sacrifice with recovery path: Gross margin at 6.3%, but DCBBS (>20% margin) growing to double-digit profit share by end of CY2026
5. Strong guidance: FY26 revenue raised to at least $40B; Q3 guidance of $12.3B+ suggests sustained demand
6. Working capital improved: Cash conversion cycle cut from 123 to 54 days; new $3.8B in credit facilities secured
7. Stock rally: After-hours +7.3% to $31.83, though still well below 52-week high of $66.44
8. Next-gen ready: Customer commitments already in place for NVIDIA Vera Rubin and AMD Helios platforms
9. Watch items: DOJ investigation, customer diversification, margin recovery execution

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