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SMCI
FY2026 Q3
Improving
Super Micro Computer, Inc. earnings call
Buzzberg read
Gross margin recovered sharply to 10.1%
SMCI reported a strong quarter with significant gross margin recovery, though revenue was impacted by a large customer's site readiness delay. Management is focused on diversifying the customer base and growing high-margin DCPBS and enterprise business while navigating supply constraints. Q3 FY26 revenue was $10.2B, slightly below guidance due to customer readiness delays, but gross margins expanded substantially to 10.1%.
Buzzberg read Gross margin recovered sharply to 10.1% SMCI reported a strong quarter with significant gross margin recovery, though revenue was impacted by a large customer's site readiness delay. Management is focused on diversifying the customer base and growing high-margin DCPBS and enterprise business while navigating supply constraints. Q3 FY26 revenue was $10.2B, slightly below guidance due to customer readiness delays, but gross margins expanded substantially to 10.1%. Read full analysisCollapse analysis
SMCI reported a strong quarter with significant gross margin recovery, though revenue was impacted by a large customer's site readiness delay. Management is focused on diversifying the customer base and growing high-margin DCPBS and enterprise business while navigating supply constraints. Q3 FY26 revenue was $10.2B, slightly below guidance due to customer readiness delays, but gross margins expanded substantially to 10.1%.
- Enterprise and DCPBS traction is driving margin improvement, with a goal for DCPBS to be 20% of net income in 2 years.
- Strong partnerships with NVIDIA, AMD, and Intel confirmed, with no change in GPU allocation.
- Management guides for Q4 revenue of $11-12.5B and FY26 revenue of $38.9-40.4B.
Revenue$10.243B-19% QoQ
EPS$0.84+22% QoQ
Gross margin9.95%Reported
Operating margin6.11%Reported
6 grounded callouts
What matters now
The highest-signal changes from the call.
Demand
Backlog at record high despite revenue dip
Margins
DCBBS and software to drive profitability
Show 3 more callouts
Demand
Enterprise channel share jumped to 28% of revenue
Legal
Management expects no restatement from DOJ probe
Supply
Supply shortages expected to ease after six months
Reported period
Actuals
| Metric | Reported | Change |
|---|---|---|
| Revenue | $10.243B | -19% QoQ |
| EPS | $0.84 | +22% QoQ |
| Gross margin | 9.95% | Reported |
| Operating margin | 6.11% | Reported |
| Free cash flow | $-6.6957B | Reported |
| Capex | $0.0803B | Reported |
Forward-looking
Forward guidance
| Metric | Period | Range | Midpoint | Status |
|---|---|---|---|---|
| EPS | FY2026 Q4 | $0.65–$0.79 | $0.72 | Guided |
| Gross margin | FY2026 Q4 | 8.2%–8.4% | 8.3% | Guided |
| Revenue | FY2026 Q4 | $11B–$12.5B | $11.75B | Guided |
| Revenue | FY2026 | $38.9B–$40.4B | $39.65B | Guided |
AI, capex & demand read
Management read
Confident
Despite legal challenges and supply constraints, management expressed strong confidence in business fundamentals, future growth, and margin recovery, emphasizing record backlog and a clear strategy for value expansion.
Management AI read
Management highlighted strong AI-driven demand, with AI GPU-related platforms contributing over 80% of revenue in Q3. They are shipping multiple NVIDIA platforms, preparing for next-generation systems (e.g., GB300MVL72, Vera Rubin MVL-72, AMD MI350/MI400), and seeing growth in agentic AI workloads, which they aim to support with ARM-based solutions.
Investment and capacity
Management is aggressively expanding global production capacity with new sites in Taiwan, Malaysia, and the Netherlands, plus a new DCBBS campus in Silicon Valley. They are on track to produce more than 6,000 racks per month, with investments in clean rooms and advanced optical networking to support next-generation data center solutions.
all 6 named companies below
Companiesreturns since call
Suppliers
Suppliers
Charles Liang
SMCI highlights ongoing strength for AMD's current MI350 platform and its preparation for future MI400-series products, signaling deepening partnership.
Evidence
“We continue to build on strong momentum of our AMD MI350 platform as we prepare for the next generation of AMD Helios solutions featuring APEC, Venus, and MI400 series of products.”
Suppliers
Charles Liang
SMCI is collaborating with Intel on next-gen Xeon platforms, providing a signal of continued joint product development.
Evidence
“In addition, we are working closely with Intel and ARM on the development of upcoming Xeon 6 Plus platforms...”
Suppliers
Charles Liang
Management is preparing for NVIDIA's next-generation 'Verilubin' systems and 'MVL-72 Supercluster'. — This confirms SMCI's strategic priority to secure early supply and design wins for NVIDIA's upcoming platform, indicating strong collaboration and early allocation.
Evidence
“We continue to grow and expand our partnership with many key suppliers. Especially with NVIDIA, we are currently shipping many SKUs over the latest large-scale systems, including GB300MVL72, many B300HGX SKUs... and we are preparing to be”
Suppliers
Charles Liang
SMCI is developing ARM-based AGI GPU solutions, expected to offer performance-per-watt that is optimal for agentic AI workloads.
Evidence
“In addition, we are working closely with Intel and ARM on the development of upcoming Xeon 6 Plus platforms and a new addition to our portfolio, including ARM AGI GPU-based solutions.”
Supply chain
Supply chain
Charles Liang
Memory and SSD prices have more than tripled over the last six months, a global supply phenomenon affecting all system builders. — This is a direct observation of inflationary pressure in memory prices, which benefits memory makers but hurts system builder margins across the industry.
Evidence
“In last six months, as you know, on the memory, SSD price grow so much, double, triple, more than triple. And some CPU shortage, especially from Intel. So, and also even some GPU shortage”
External signals
Supply-chain alpha · 5returns since call
Gross margin recovered substantially to 10.1% quarter-over-quarter, driven by higher-margin enterprise and DCPBS mix, despite a sequential revenue decline.
Evidence
“The Q3 non-GAAP gross margin was 10.1%, up from 6.4% in Q2. Gross margins were ahead of expectations, driven by our customer and product mix...”
Working capital swung to a large negative free cash flow of -$6.7B in Q3 due to a $10B reduction in accounts payable, reflecting a significant drain on cash flow despite slower revenue growth.
Evidence
“Cash flow used in operations for Q3 was 6.6 billion compared to 24 million used in the prior quarter. Operating cash flow was impacted by a reduction of $10 billion in accounts payable...”
Management is preparing for NVIDIA's next-generation 'Verilubin' systems and 'MVL-72 Supercluster'.
Memory and SSD prices have more than tripled over the last six months, a global supply phenomenon affecting all system builders.
SMCI's DCPBS (Data Center Building Block Solutions) software and services are growing rapidly, with revenue from management software reaching $46 million this quarter.
Methodology & coverage
Management-only analysis. All 6 validated company mentions are shown. Reported actuals and forward guidance are kept separate. Public evidence is limited to eight short attributed quotes. AI-generated analysis can be incomplete or wrong; verify important claims against the original source.