James Foord is an economist by trade and has been analyzing global markets for the past decade. He leads the investing group The Pragmatic Investor where the focus is on building robust and truly diversified portfolios that will continually preserve and increase wealth. The Pragmatic Investor covers global macro, international equities, commodities, tech and cryptocurrencies and is designed to guide investors of all levels in their journey. Features include a The Pragmatic Investor Portfolio, weekly market ...

James Foord is an economist by trade and has been analyzing global markets for the past decade. He leads the investing group The Pragmatic Investor where the focus is on building robust and truly diversified portfolios that will continually preserve and increase wealth. The Pragmatic Investor covers global macro, international equities, commodities, tech and cryptocurrencies and is designed to guide investors of all levels in their journey. Features include a The Pragmatic Investor Portfolio, weekly market ...

Core Viewpoint - Super Micro Computer (SMCI) experienced significant revenue growth in Q2 of fiscal 2026, driven by AI-driven expansion, leading to a 10% increase in stock price during trading [1] Financial Performance - Supermicro reported Q2 revenue of $12.68 billion, a 123% increase year-over-year and a 153% increase quarter-over-quarter, exceeding Wall Street expectations and management's guidance of $10 billion to $11 billion [2] - The revenue included approximately $1.5 billion from shipments delayed from Q1, indicating strong underlying demand despite supply chain constraints [3] Revenue Breakdown - Customer demand is primarily from large global data center operators and enterprise buyers, with AI GPU platforms contributing significantly to Q2 revenue [4] - Enterprise channel revenue reached $2 billion, a 42% increase year-over-year and a 29% increase quarter-over-quarter, while the OEM appliance and large data center segment generated $10.7 billion, accounting for about 84% of total revenue, growing 151% year-over-year and more than tripling sequentially [5] Future Outlook - Management anticipates continued strong growth into Q3, forecasting net sales of at least $12.3 billion, which implies a year-over-year growth of approximately 117% [6]

Core Viewpoint - Super Micro Computer, Inc. (SMCI) is a significant player in the computer-storage devices industry, recognized for its high-performance and energy-efficient server and storage solutions, competing with major tech companies to maintain its market position through innovation and consistent performance [1] Financial Performance - SMCI reported quarterly earnings of $0.69 per share, exceeding the Zacks Consensus Estimate of $0.49 per share by 40.10%, indicating strong financial performance [2] - For the quarter ending December 2025, SMCI achieved $12.68 billion in revenue, surpassing the Zacks Consensus Estimate by 21.42%, and showing a substantial increase from $5.68 billion in the same period last year [3] Stock Performance - The current stock price of $29.67 reflects a slight decrease of 0.13%, with historical performance indicating potential for growth, as the stock has fluctuated between $28.64 and $30.17, and has a 52-week high of $66.44 and a low of $27.60 [4] - SMCI's market capitalization is approximately $17.71 billion, with a trading volume of 36.51 million shares, highlighting its robust financial health and potential for future growth [5] Analyst Outlook - Tim Long from Barclays set a price target of $38 for SMCI, suggesting a potential increase of about 28.08% from the current stock price, aligning with the company's impressive financial performance [2]

Market Overview - The U.S. stock market is experiencing mixed trading patterns with a notable rotation out of technology giants and into broader market sectors [1] - The S&P 500 has slipped around 0.2% to 0.3%, marking a modest decline for the fourth time in the last five days [2] - The Nasdaq Composite has traded approximately 1% lower, with the Nasdaq 100 specifically seeing a 1.4% loss [2] - The Dow Jones Industrial Average has risen by as much as 389 points, or 0.8%, indicating a shift away from tech stocks towards firms expected to benefit from improving growth prospects [2] Economic Indicators - The yield on 10-year Treasuries has remained steady at 4.28% [3] - Upcoming economic data includes the ADP Employment Change and ISM Services PMI for January, which are crucial for assessing the labor market and services sector [5] - The week will culminate with the U.S. Employment Report on February 6th, which includes non-farm payrolls and average hourly earnings [6] Company-Specific Highlights - Advanced Micro Devices (AMD) shares dropped by as much as 15.7% despite stronger-than-expected profits, indicating high expectations for AI-related companies [9] - Uber Technologies (UBER) fell 3% to 5% after its quarterly results and profit forecast fell short of expectations [10] - Super Micro Computer (SMCI) rallied by 12% to 14% after delivering stronger-than-expected profits [10] - Eli Lilly (LLY) surged by 9.2% after exceeding profit expectations and providing strong guidance, driven by its obesity drugs [11] - Silicon Laboratories (SLAB) shares soared by 51% following the announcement of its acquisition by Texas Instruments for approximately $7.5 billion [13] - Nvidia (NVDA) shares declined 2.8% due to a broad tech sell-off and uncertainty surrounding its OpenAI investment [14]

Core Viewpoint - Super Micro's stock has surged by over 12% following strong earnings, driven by record revenue from AI demand, despite mixed analyst reactions and ongoing margin pressures [2][3][5]. Financial Performance - Super Micro reported record revenue of $12.7 billion, a 123% year-over-year increase, significantly surpassing the expected $10.4 billion [4]. - Earnings per share (EPS) came in at 69 cents, exceeding analyst expectations of 49 cents [4]. Margin and Challenges - The company is facing near-term margin pressure, with a gross margin of 6.3% for the December quarter, down from 9.3% in the previous quarter [5][6]. - Analysts noted that competition and margin pressures remain challenges, with some price targets being lowered due to these factors [6][7]. Analyst Reactions - Mazuo raised its price target from $31 to $33 but maintained a neutral rating, while NEM lowered its target from $51 to $40, indicating some upside potential [6][7]. - Barclays also reduced its price target from $43 to $38, maintaining an equal weight rating, citing gross margin pressures [8][9]. Market Context - The stock's recent surge is not in line with the broader tech sector, which is experiencing pressure, and analysts express skepticism about the sustainability of this upward movement [2][15]. - Concerns were raised about the impact of rising memory prices on Super Micro's margins, particularly in the context of the AI boom and its effects on the company's legacy enterprise server segment [10].

Core Insights - Super Micro Computer (SMCI) reported second-quarter fiscal 2026 earnings of 69 cents per share, exceeding the Zacks Consensus Estimate by 40.8% and reflecting a year-over-year increase of 16.9% [1] - The company achieved revenues of $12.68 billion for the same quarter, surpassing the Zacks Consensus Estimate by 21.42% and marking a significant year-over-year growth of 122.8% [2] Financial Performance - Revenues from OEM Appliance and Large Data Center segments, which constitute approximately 84% of total revenues, reached $10.7 billion, representing a year-over-year increase of 151% and a sequential rise of 210% due to strong hyperscale AI deployments [3] - The Enterprise/Channel segment, accounting for around 16% of total revenues, generated $2 billion, reflecting a 42% year-over-year increase and a 29% sequential rise [3] Geographic Breakdown - The United States contributed 86% of total sales, with a year-over-year increase of 184% and a sequential increase of 496%, driven by large-scale AI infrastructure rollouts [4] - Asia represented 9% of revenues, up 53% year-over-year but down 49% sequentially [4] - Europe contributed 3% of revenues, down 63% year-over-year, while the Rest of the World accounted for 2%, up 77% from the prior-year quarter [4] Margins and Expenses - SMCI's non-GAAP gross margin was 6.4%, down from 11.9% a year ago, attributed to an unfavorable customer and product mix, higher freight and expedite costs, and large-scale shipments of new AI platforms [5] - Non-GAAP operating expenses were $241 million, representing 1.9% of revenues, which is a 6.5% increase year-over-year [5][6] Cash Flow and Balance Sheet - As of December 31, 2025, total cash and cash equivalents were $4.1 billion, slightly down from $4.2 billion at the end of the previous quarter [7] - The company reported an operating cash outflow of $24 million during the quarter and a negative free cash flow of $45 million [7] Future Guidance - For the third quarter of fiscal 2026, SMCI expects net sales to be $12.3 billion, with the Zacks Consensus Estimate at $10.28 billion, indicating year-over-year growth of 123.4% [8] - The company anticipates non-GAAP diluted EPS of 60 cents, with the Zacks Consensus Estimate at 61 cents, reflecting a year-over-year growth of 96.8% [8] - For fiscal 2026, SMCI raised its revenue outlook to $40 billion, compared to the Zacks Consensus Estimate of $36.55 billion, indicating year-over-year growth of 66.35% [8]

Company Overview - Proactive is a financial news publisher that provides fast, accessible, informative, and actionable business and finance news content to a global investment audience [2] - The company operates with a team of experienced and qualified news journalists across key finance and investing hubs including London, New York, Toronto, Vancouver, Sydney, and Perth [2] Market Focus - Proactive specializes in medium and small-cap markets while also covering blue-chip companies, commodities, and broader investment stories [3] - The content delivered by the team includes insights across various sectors such as biotech and pharma, mining and natural resources, battery metals, oil and gas, crypto, and emerging digital and EV technologies [3] Technology Adoption - Proactive is recognized for its forward-looking approach and enthusiastic adoption of technology to enhance workflows [4] - The company utilizes automation and software tools, including generative AI, while ensuring that all content is edited and authored by humans to maintain quality and best practices in content production [5]

Quick Read Super Micro Computer (SMCI) delivered Q2 revenue of $12.7B, up 123%. SMCI raised its full-year guidance to at least $40B from $33B. Super Micro’s revenue beat came from $12B in delayed design wins that finally materialized from prior quarters. Surging demand for liquid-cooled AI servers built on Nvidia (NVDA) and AMD (AMD) platforms drove Super Micro’s growth. Investors rethink 'hands off' investing and decide to start making real money Yesterday we were watching whether Super Micro Co ...

Core Viewpoint - Super Micro Computer (SMCI) experienced a significant stock rally following a report of over $12.7 billion in revenue for Q2, but institutional investors are cautious about the sustainability of this growth, suggesting the rally may be a "trap" [1] Group 1: Financial Performance - SMCI's revenue more than doubled to $12.7 billion in the second quarter, driven by delayed sales finally being recognized [1] - Despite record revenue, the adjusted gross margin has plummeted to 6.3%, indicating a severe decline in profitability [1] - The company is operating with razor-thin margins, positioning itself as a high-volume, low-margin "box mover" [1] Group 2: Business Model Concerns - A significant 63% of Q2 revenue came from a single large data center client, creating a risky "single point of failure" scenario [1] - The company is facing challenges from rising freight costs, component shortages, tariffs, and expensive logistics, which are impacting its profitability [1] - SMCI's governance issues from 2024-2025 continue to affect its business stability, with major clients diverting orders to more stable partners [1] Group 3: Market Position and Investment Outlook - The opportunity cost of investing in SMCI is high, as the company deals with past accounting issues and auditor resignations [1] - Competitors like DELL and HPE are gaining market share with stronger balance sheets and more transparent corporate structures [1] - Investors are encouraged to consider higher-quality stocks in the AI sector that do not carry the same risks as SMCI [1]