Super Micro Computer Inc. has found itself in more hot water today after issuing preliminary guidance for its third-quarter earnings and revenue that came in far below Wall Street’s expectations.

Its stock tanked after it blamed some customers for delaying orders of new servers and computing products. The company said it expects earnings before certain costs such as stock compensation of 16 to 17 cents per share, well below the Street’s forecast of 46 cents per share, while the company itself had previously forecast earnings of 36 to 53 cents.

Moreover, Supermicro said its revenue will likely come to just $4.5 billion to $4.6 billion, compared with its earlier guidance of $5 billion to $6 billion. Analysts are looking for $5.38 billion in revenue.

Shares of Supermicro, which makes servers for generative artificial intelligence workloads, fell more than 15% in late-trading. That means the company’s stock is down more than 58% in the last 12 months, although it’s still up 28% in the year to date.

The company is expected to report its full results on May 6.

The alarming miss comes after the company slashed its full-year guidance in February to a range of $23.5 billion to $25 billion, down from its earlier forecast of $26 billion to $30 billion. Wall Street is looking for sales of $23.99 billion in fiscal 2025.

Three months earlier, Supermicro Chief Executive Charles Liang (pictured) made headlines with an extraordinary claim that the company is looking for as much as $40 billion in revenue in fiscal 2026, well above the Street’s target of $33.27 billion. At the time, it said it anticipates rapid adoption of its new direct-liquid cooling technology in enterprise data centers over the next 12 to 18 months.

But that sky-high forecast seems a lot less likely going on the company’s current performance. In a statement, Supermicro blamed its lower forecast for the current quarter on “some delayed customer platform decisions,” which moved sales into the fourth quarter. It also said it has seen “higher inventory reserves resulting from older generation products.”

It’s likely that Supermicro is referring to the decision of customers to transition to servers based on Nvidia Corp.’s new Blackwell graphics processing units, which promises much higher performance for AI workloads. Nvidia previously said it has sold all of its available inventory for Blackwell this year.

Analysts said Supermicro may have to take an inventory write-down to account for products based on Nvidia’s older Hopper GPUs, and some that don’t play nicely with Blackwell due to having lower bandwidth memory chips. The Blackwell chips need newer high-bandwidth memory chips to achieve optimal performance.

Evercore ISI analyst Amit Daryanani told MarketWatch that Supermicro saw a number of “order pushouts” during the quarter, as customers opt for Blackwell-based products over current-generation servers.

“We believe this is reflective of Supermicro being more Hopper-skewed while customers are opting to wait for Blackwell to ramp,” Darayanani said. “This remains a concern for some vendors with excess Hopper inventory.”

Supermicro’s stock slump had a knock-on effect on other major players in the server market. Dell Technologies Inc. fell almost 5% in extended trading, while Hewlett Packard Enterprise Co. declined about 2%. Nvidia’s stock was also down 2% today.

The lower guidance warning will bring even more scrutiny onto Supermicro, which has been mired in controversy for months now as a result of its delayed financial reports and warnings from short sellers.

In February, the company filed its fiscal 2024 financial report and results for the first two quarters of fiscal 2025 just hours before a deadline to stay listed on the Nasdaq exchange had expired.

The deadline was issued after Supermicro delayed publishing its annual results for fiscal 2024 after its main auditor, Ernst & Young, turned its back on the company. It said last year it no longer had confidence in the representations of its management, and didn’t want to be associated with the financial statements it had prepared. Supermicro later hired the services of BDO USA as its independent financial auditor.

Ernst & Young walked away about a month after reports emerged that Supermicro is being probed by the U.S. Justice Department regarding possible financial irregularities. That investigation was launched following claims by a former employee, who filed a whistleblower lawsuit against the company, accusing it of accounting violations.

Prior to that, in August, the short-seller firm Hindenburg Research LLC announced it had discovered a number of red flags that suggest Supermicro might be cooking the books.

The controversy resulted in Supermicro losing about 80% of its market capitalization during the third and fourth quarters of last year, wiping out many of the stellar gains it enjoyed back in 2023, when it emerged as one of the early winners of the generative AI boom.

Photo: Supermicro